With one candidate facing an ammonia attack, Russia's most famous murder suspect flitting in and out of the race and the country's leading freemason joining a cast-list of 23 hopefuls at the latest count, it's no surprise that the Sochi mayoral election is seen by some as a farce.
But beneath the froth generated by this chorus line of cabaret candidates, political commentators say the race is fast becoming a litmus test of government policy in the face of the economic meltdown - and the authorities' willingness to allow a greater measure of plurality into the political system.
Prime Minister Vladimir Putin, visiting the city for a meeting on the Sochi Olympics with President Dmitry Medvedev, top officials and businessmen on Monday, was moved to urge voters not to get drawn into the political circus which has engulfed the Black Sea resort as voters prepare to select a mayor on April 26, and warned that "politicians should not use the Olympics to further their own goals."
United Russia has chosen acting mayor Anatoly Pakhomov as its candidate, and his most serious opposition is set to come from charismatic opposition spokesman Boris Nemtsov and Alexander Lebedev, the cosmopolitan media tycoon who has previously represented both United Russia and Just Russia. The Communists have put forward Yury Dzagania, while the ultranationalist Liberal Democratic Party replaced murder suspect Andrei Lugovoi - wanted in Britain in connection with the 2006 death of Alexander Litvinenko - with local politician Alexei Kolesnikov.
Medvedev has recently said he welcomes criticism of the government's anti-crisis measures, and has hinted in recent months that he is more open to pluralism than Putin was as president.
Vladimir Pribylovsky, an analyst with the Panorama think tank, said Lebedev could possibly mount a successful challenge if there was a level playing field in the election.
"Elections of city mayors are almost the only real polls left," Pribylovsky said. "If this were a fair election, there is a chance that Lebedev might win in the second round. Lebedev, Pakhomov and Nemtsov would likely be left in the second round, and if Lebedev were to join forces with Nemtsov, he could win. However, the government will make sure that such a thing does not happen."
Sergey Markov, a senior United Russia State Duma deputy and an adviser to the government, agreed that mayoral elections were now more competitive than Duma races.
"The chances for practical competition in other elections have shrunk," he said by telephone. "People like Nemtsov find it difficult to compete for parliament because they have no time to get a good party list, so mayoral elections appear to be the most competitive, interesting and intense."
Nemtsov, a former deputy prime minister under Boris Yeltsin and an outspoken critic of Sochi's Olympic commitments, has vowed to continue campaigning despite being attacked by an ammonia-spraying assailant on his way to a press conference on Monday. In an interview with Ekho Moskvy radio he accused pro-government youth group 'Nashi' of the assault, prompting a law suit demanding a million roubles in compensation.
"It's good publicity for Nemtsov," said Markov. "He will want to come back into mainstream politics, so Sochi is all about publicity for him. He has a theoretical possibility of winning, but the people of Sochi know they are faced with real problems which can't be solved in opposition to the federal and regional authorities, but only through co-operation with them."
Nikolai Petrov, a regional political analyst at the Carnegie Moscow Centre, said that he didn't believe Nemtsov would be allowed to stand. "Nemtsov was born in Sochi, he's pretty popular - especially when there are lots of conflicts and problems," said Petrov. "If he's competing with a dull official like Pakhomov he can win. But Russia's electoral legislation is so complicated it's possible to push anybody out at any time over various technicalities."
Petrov added that inflating the list of candidates before the final registrations were confirmed helped the Kremlin to neutralise the opposition without looking heavy-handed. "To exclude such candidates [as Nemtsov] without looking like the bad guys, they need to attract other names," he added. "If only five of 15 people drop out it would look pretty normal."
He was dubious about Lebedev's prospects, saying that the businessman was not a serious candidate.
"We just don't know if he's trying to use politics to solve his problems or vice versa," said Petrov. "He can't be a truly independent candidate because he does business in Russia and so is dependent on the Kremlin. He could try to sell his participation - or non-participation - for business benefits."
Nominations for the poll closed on Thursday - with 23 hopefuls including arm-wrestling champion Stanislav Koretsky and ballerina Anastasia Volochkova planning to put themselves forward. The local authorities will spend the next week checking the applications and officially registering candidates ahead of an April 2 deadline.
Given their recent electoral shock in Murmansk, it might seem surprising that United Russia - a party unfamiliar with losing elections - has kept faith with a relatively low-profile, local candidate.
Markov insisted, however, that it was essential to have a local as mayor as the city prepares for a place in the international limelight in 2014.
"Sochi is attractive to the whole country, because of the Olympics and because everyone likes to have a couple of weeks' holiday there," Markov said. "But local people understand that their problems are not the problems of a big ... city, but problems of a medium-sized local city." He explained that in the past rival agendas had left the city and the regional authority in a political stalemate.
"There was a political battle and the regional governor won it," said Markov. "He based his power and popularity on the poorer people, which was very different from the style of rich new Russian investors who totally ignore human interests. There's no reason for the federal people to change this situation."
The election was triggered by the resignation of Mayor Vladimir Afanasyenkov on October 30 on health grounds.
Tuesday 31 March 2009
Grim Ending To Ukraine's 'Orange' Fairy Tale
KIEV, Ukraine -- For thousands of jubilant Ukrainians crammed into Kiev's main square on Jan. 23, 2005, a duo of pro-Western politicians were a prince and princess ready to whisk them to a magic land of EU membership and prosperity.
Now with the so-called Orange Revolution that swept the old order from power a distant memory, the tale of Viktor Yushchenko and Yulia Tymoshenko is, like many folk tales, heading for a somewhat macabre end.A victorious Yushchenko took the acclaim of the crowds that day after finally being inaugurated president after a disputed election. Tymoshenko would a few days later become his prime minister.But now Ukraine is among the countries worldwide worst hit by the economic crisis and the two leaders have been engaged in a poisonous feud that has made them a laughing stock in the media.With next presidential elections expected in January, Yushchenko's poll ratings are languishing at less than three percent, possibly making him the most unpopular elected head of state in the world."The economic crisis is more serious than in other countries. But there is another factor: the political instability and constant crisis situation," said the director of the Penta political research center Volodymyr Fesenko."There is a great disappointment with the existing political leadership."The vast independence square in central Kiev that was the main arena for 2004's peaceful uprising is now inhabited by the grubby tents of protesters who have been staging a sit-in against the ruling elite over the past four weeks."Get Usikh!" reads the Ukrainian-language slogan of one movement daubed on its tents along with a broom. "Clear Out!"The country's economy is paying for its continued reliance on exports from Soviet-era heavy industry, whose production has slumped by more than 30 percent as global demand slumped for metal and mining products.Only now have Yushchenko and Tymoshenko agreed to a formal ceasefire in their public battle, a condition set by the International Monetary Fund to give out a US$1.9 billion tranche of a standby loan vital for staving off the risk of default.The weekly Fokus put the pair on its cover as Obi-Wan Kenobi and Princess Leia from the "Star Wars" films, under the headline "With Whom Will the Force Be?." The Korrespondent meanwhile portrayed the pair as child vagabonds in rags with the headline "The Children of Default."A twist in the tale?With the current story ending so badly, the question is what the next chapter will hold for the 46 million inhabitants of Europe's largest country.Yushchenko seems out of the frame, and the latest poll by the Razumkov center think tank shows his vanquished opponent from 2004, Viktor Yanukovich, leading with 19.5 percent and Tymoshenko second with 17.9 percent.The charismatic Tymoshenko, who still styles her hair with traditional Ukrainian braids, is conventionally seen as a pro-Western figure while Yanukovich draws his support from pro-Moscow Russian speaking regions."For the moment, Tymoshenko is the favorite and she has a very good and strong team. But the crisis is working against her. With every week of the crisis, her chances of victory become worse," commented Fesenko.But labels are a tricky business in Ukraine's shifting political world and it was Tymoshenko who signed the deal with Russian Prime Minister Vladimir Putin ending the New Year gas crisis.Oleksandr Lytvynenko, senior political analyst at Razumkov center, said it would be wrong to see Yanukovich's Party of the Regions as an unambiguously pro-Russian force."They can come up with pro-Russian slogans but Yanukovich accused Tymoshenko of acting in Moscow's interests when she signed the deal to end the gas conflict.""It is a party that is not interested in the integration of Ukraine into Russia but with obtaining power in Ukraine itself. The party was always like this."Adding further intrigue is speculation that Tymoshenko could form an alliance with Yanukovich which could see her staying as prime minister and the latter working as a more ceremonial president.And as if that was not enough, the Kiev political world has been abuzz with talk that an outside figure could spring to prominence in the elections.Areseniy Yatseniuk, 34, a pro-Western protege of Yushchenko and an ex-parliament speaker, is winning around 12 percent of the vote in presidential opinion polls although he is only just forming a political faction.Meanwhile, the establishment was rocked by the surprise victory of the Freedom movement of Oleh Tyahnybok, known for his populist Ukrainian nationalist rhetoric, in elections in the western Ternopil region this month."Many people are saying that those in power are yesterday's people and new faces are needed. There is a demand for something new," said Lytvynenko.But for all the bitter disappointments, there have been dramatic changes within society since the Orange Revolution removed a corrupt regime that often seemed stuck in a Soviet time warp."The relationship between people and politics has changed. It has become more rational, critical. There is no sign of the extent of stagnation in public consciousness that there was before 2004," said Lytvynenko.
Now with the so-called Orange Revolution that swept the old order from power a distant memory, the tale of Viktor Yushchenko and Yulia Tymoshenko is, like many folk tales, heading for a somewhat macabre end.A victorious Yushchenko took the acclaim of the crowds that day after finally being inaugurated president after a disputed election. Tymoshenko would a few days later become his prime minister.But now Ukraine is among the countries worldwide worst hit by the economic crisis and the two leaders have been engaged in a poisonous feud that has made them a laughing stock in the media.With next presidential elections expected in January, Yushchenko's poll ratings are languishing at less than three percent, possibly making him the most unpopular elected head of state in the world."The economic crisis is more serious than in other countries. But there is another factor: the political instability and constant crisis situation," said the director of the Penta political research center Volodymyr Fesenko."There is a great disappointment with the existing political leadership."The vast independence square in central Kiev that was the main arena for 2004's peaceful uprising is now inhabited by the grubby tents of protesters who have been staging a sit-in against the ruling elite over the past four weeks."Get Usikh!" reads the Ukrainian-language slogan of one movement daubed on its tents along with a broom. "Clear Out!"The country's economy is paying for its continued reliance on exports from Soviet-era heavy industry, whose production has slumped by more than 30 percent as global demand slumped for metal and mining products.Only now have Yushchenko and Tymoshenko agreed to a formal ceasefire in their public battle, a condition set by the International Monetary Fund to give out a US$1.9 billion tranche of a standby loan vital for staving off the risk of default.The weekly Fokus put the pair on its cover as Obi-Wan Kenobi and Princess Leia from the "Star Wars" films, under the headline "With Whom Will the Force Be?." The Korrespondent meanwhile portrayed the pair as child vagabonds in rags with the headline "The Children of Default."A twist in the tale?With the current story ending so badly, the question is what the next chapter will hold for the 46 million inhabitants of Europe's largest country.Yushchenko seems out of the frame, and the latest poll by the Razumkov center think tank shows his vanquished opponent from 2004, Viktor Yanukovich, leading with 19.5 percent and Tymoshenko second with 17.9 percent.The charismatic Tymoshenko, who still styles her hair with traditional Ukrainian braids, is conventionally seen as a pro-Western figure while Yanukovich draws his support from pro-Moscow Russian speaking regions."For the moment, Tymoshenko is the favorite and she has a very good and strong team. But the crisis is working against her. With every week of the crisis, her chances of victory become worse," commented Fesenko.But labels are a tricky business in Ukraine's shifting political world and it was Tymoshenko who signed the deal with Russian Prime Minister Vladimir Putin ending the New Year gas crisis.Oleksandr Lytvynenko, senior political analyst at Razumkov center, said it would be wrong to see Yanukovich's Party of the Regions as an unambiguously pro-Russian force."They can come up with pro-Russian slogans but Yanukovich accused Tymoshenko of acting in Moscow's interests when she signed the deal to end the gas conflict.""It is a party that is not interested in the integration of Ukraine into Russia but with obtaining power in Ukraine itself. The party was always like this."Adding further intrigue is speculation that Tymoshenko could form an alliance with Yanukovich which could see her staying as prime minister and the latter working as a more ceremonial president.And as if that was not enough, the Kiev political world has been abuzz with talk that an outside figure could spring to prominence in the elections.Areseniy Yatseniuk, 34, a pro-Western protege of Yushchenko and an ex-parliament speaker, is winning around 12 percent of the vote in presidential opinion polls although he is only just forming a political faction.Meanwhile, the establishment was rocked by the surprise victory of the Freedom movement of Oleh Tyahnybok, known for his populist Ukrainian nationalist rhetoric, in elections in the western Ternopil region this month."Many people are saying that those in power are yesterday's people and new faces are needed. There is a demand for something new," said Lytvynenko.But for all the bitter disappointments, there have been dramatic changes within society since the Orange Revolution removed a corrupt regime that often seemed stuck in a Soviet time warp."The relationship between people and politics has changed. It has become more rational, critical. There is no sign of the extent of stagnation in public consciousness that there was before 2004," said Lytvynenko.
Extreme Right Gains Ground As Ukraine Falls Into Crisis
MOSCOW, Russia -- Europe's economic crisis has allowed the extreme right in Ukraine to capitalise on the turmoil engulfing the former Soviet republic.
An unexpected regional election victory by a previously marginal ultra-nationalist party is among a string of developments in Ukraine that threaten to fulfil the worst fears of G20 leaders as they gather for their summit in London.Lacking the protection of European Union membership, Ukraine has few of the safeguards that prevent its Western neighbours from falling into ruin.A sharply weaker currency, a collapse in exports and an economy expected to contract by at least six per cent this year has forced the country to seek £11 billion from the International Monetary Fund. Even this lifeline is endangered by a poisonous feud between President Viktor Yuschenko and Yulia Tymoshenko, the prime minister.The two rivals led the Orange Revolution in 2004, before falling out in spectacular style. As Mrs Tymoshenko plots to take Mr Yuschenko's job, ordinary Ukrainians are showing signs of rejecting them both.On March 15, voters in the Ternopil region of western Ukraine elected a new regional assembly. This was an Orange Revolution bastion, a region that has long sought to embrace the West and shun Russia.But it is also has Ukraine's highest unemployment. In a crowded field, the previously little-known Freedom Party won 50 of the regional assembly's 120 seats as voters embraced its hard Right leader, Oleg Tyagnibok, who has urged the expulsion of all Jews and Russians from Ukraine."The problem is less the popularity of the nationalists than the universal disappointment with mainstream parties," said Viktor Chumak, a political scientist in Ukraine's capital, Kiev. "Voters are sympathising with radicals more and more as a result of the crisis."So concerned are the authorities with the Ternopil result, which they claim was rigged, that commentators are predicting the presidential election could be postponed. Some commentators even say that the constitution may be changed so that the president is chosen by parliament rather than by the people.Critics argue that mainstream politicians - both the squabbling Orange Revolution ruling alliance and the equally discredited pro-Russian opposition - only have themselves to blame because of their failure to give a lead in a time of crisis.As the danger of political radicalism grows, Ukraine is in danger of formal bankruptcy. Oleksandr Suhonyako, the president of the Association of Ukrainian Banks, gave warning that the country could default on its sovereign debt because of political division and ineptitude."In a way, the crisis in Ukraine is less an economic one than a political one," he told the Daily Telegraph. "The key political leaders do not understand how to lead the country out of crisis. If the political crisis continues, we could see the worst case scenario. The threat of sovereign default is there."The country's government debt, at only 20 per cent of GDP, is well below the recognised danger threshold. The main concern is over corporate debt, with fears that banks could collapse, triggering crises in the financial sectors of western European countries like Austria, which is significantly exposed to Ukraine.Earlier this month, Western diplomats and politicians forced Mr Yuschenko and Mrs Tymoshenko to pledge to work together to fulfill the IMF's conditions for the rescue package.The prime minister, however, quickly reneged. On the day she pledged to use her parliamentary majority to pass the laws recommended by the IMF, Mrs Tymoshenko instead marshalled her forces to sack the foreign minister, one of the president's most important allies.The IMF's money is still being withheld.
An unexpected regional election victory by a previously marginal ultra-nationalist party is among a string of developments in Ukraine that threaten to fulfil the worst fears of G20 leaders as they gather for their summit in London.Lacking the protection of European Union membership, Ukraine has few of the safeguards that prevent its Western neighbours from falling into ruin.A sharply weaker currency, a collapse in exports and an economy expected to contract by at least six per cent this year has forced the country to seek £11 billion from the International Monetary Fund. Even this lifeline is endangered by a poisonous feud between President Viktor Yuschenko and Yulia Tymoshenko, the prime minister.The two rivals led the Orange Revolution in 2004, before falling out in spectacular style. As Mrs Tymoshenko plots to take Mr Yuschenko's job, ordinary Ukrainians are showing signs of rejecting them both.On March 15, voters in the Ternopil region of western Ukraine elected a new regional assembly. This was an Orange Revolution bastion, a region that has long sought to embrace the West and shun Russia.But it is also has Ukraine's highest unemployment. In a crowded field, the previously little-known Freedom Party won 50 of the regional assembly's 120 seats as voters embraced its hard Right leader, Oleg Tyagnibok, who has urged the expulsion of all Jews and Russians from Ukraine."The problem is less the popularity of the nationalists than the universal disappointment with mainstream parties," said Viktor Chumak, a political scientist in Ukraine's capital, Kiev. "Voters are sympathising with radicals more and more as a result of the crisis."So concerned are the authorities with the Ternopil result, which they claim was rigged, that commentators are predicting the presidential election could be postponed. Some commentators even say that the constitution may be changed so that the president is chosen by parliament rather than by the people.Critics argue that mainstream politicians - both the squabbling Orange Revolution ruling alliance and the equally discredited pro-Russian opposition - only have themselves to blame because of their failure to give a lead in a time of crisis.As the danger of political radicalism grows, Ukraine is in danger of formal bankruptcy. Oleksandr Suhonyako, the president of the Association of Ukrainian Banks, gave warning that the country could default on its sovereign debt because of political division and ineptitude."In a way, the crisis in Ukraine is less an economic one than a political one," he told the Daily Telegraph. "The key political leaders do not understand how to lead the country out of crisis. If the political crisis continues, we could see the worst case scenario. The threat of sovereign default is there."The country's government debt, at only 20 per cent of GDP, is well below the recognised danger threshold. The main concern is over corporate debt, with fears that banks could collapse, triggering crises in the financial sectors of western European countries like Austria, which is significantly exposed to Ukraine.Earlier this month, Western diplomats and politicians forced Mr Yuschenko and Mrs Tymoshenko to pledge to work together to fulfill the IMF's conditions for the rescue package.The prime minister, however, quickly reneged. On the day she pledged to use her parliamentary majority to pass the laws recommended by the IMF, Mrs Tymoshenko instead marshalled her forces to sack the foreign minister, one of the president's most important allies.The IMF's money is still being withheld.
Ukraine Cafe Glorifies Anti-Soviet Fighters
LVIV, Ukraine -- The popular Kryivka (secret place) cafe in the western Ukrainian city of Lviv celebrates the deeds of a wartime anti-Soviet guerrilla group.
"Are there Russians or Communists amongst you?" barked the grey bearded man at the entrance, clutching an old sub-machine gun.The man, dressed as a soldier, offers visitors a glass of honey vodka -- "poison for the Moskals", he cackles -- before leading them to the cafe which seeks to imitate a Ukrainian nationalist hideout.The controversial Ukrainian Insurgent Army (UPA) are still revered as heroes in western Ukraine for fighting Soviet forces up to the early 1950s in the hope of creating an independent Ukrainian state.But their detractors accuse them of collaborating with the Nazis and taking part in deadly ethnic cleansing operations against local Polish citizens.Almost everything in the cafe is a reference to the UPA: the waiters are dressed in khaki, the crockery is metal and wartime weapons and photos adorn the walls.You can even fire a plastic bullet into the portrait of Soviet wartime leader Joseph Stalin, something Ukraine's First Lady Kateryna Yushchenko lost no time in doing when she visited."Before, we had a plaster head of Lenin to fire at. But it was completely destroyed in about two weeks of shooting and we still haven't purchased a new one," said senior waitress Anna Garbar.The existence of such a restaurant would be unimaginable in the east of Ukraine, where daily life is conducted mostly in Russian rather than Ukrainian and memories of the Soviet Union are fonder.For centuries part of the Polish Kingdom and then an important town of the Austro-Hungarian Empire, the beauty of Lviv's UNESCO-listed mediaeval centre is in stark contrast to the urban landscapes of most ex-Soviet cities.The city of Lviv and its region were only annexed into the Soviet Union during World War II and the city has grown into a Ukrainian nationalist stronghold since the country won independence.After the hopes of the 2004 Orange Revolution that ousted a corrupt old regime from power, political unity remains elusive in Ukraine partly because of the country's linguistic and cultural division.The divisions show no sign of becoming smaller. This month, the Freedom movement of Oleh Tyahnybok, known for his populist Ukrainian nationalist rhetoric, won a shock victory in local elections in a region neighbouring Lviv."Some Russian speakers are scared of coming in, while others try and speak as little as possible," laughs Garbar, who has worked as a waitress at the Kryivka since its opening in August 2007. "But once they see that no-one means them harm they relax," she said.For the cafe's founder and co-owner Yurko Nazaruk the aim is to "tell the true history about the UPA, which fought for the independence of western Ukraine."But he emphasises that this is done with a sense of humour and a light touch. "We wanted to stick the myth about our city -- that we kill Russians, that it's illegal to speak Russian in a street -- on its head."The UPA remains deeply controversial today and not just amongst historians.Moves by Ukraine's pro-Western President Viktor Yushchenko to rehabilitate its leaders have caused consternation in Moscow, which sees such groups as enemies in the fight against Fascism.In 2007, Yushchenko bestowed the title of Hero of Ukraine on the group's overall leader Roman Shukhevych, who was killed in 1950 in a shoot-out with Soviet security forces.Western Ukraine had again been part of Poland in the inter-war period, until Soviet troops ousted Polish forces in 1939. Nazi forces then took over the region two years later.Formed in 1942, the UPA initially welcomed the arrival of German troops as liberators from Communist oppression although Ukrainian historians insist the group then declared war on the Nazis.The group fought Soviet forces from its foundation up to the 1950s and is also blamed for killing thousands of Polish civilians in its conflict with the Armia Krajowa (Home Army, AK) non-Communist Polish resistance.The UPA's hatred of Communism is reflected in the cafe's menu, which includes delicacies like a "grilled KGB agent" or a fish speciality called "drunken Russian"."We are trying to show history as it is, and in no way do propaganda for Nazism," said the co-owner Nazaruk.And for most of the satisfied clientele, the cafe's references are more of a joke than anything else. For Vitali Tolstoy, one of the few native Russian speakers in Lviv, it is precisely the place where old enemies should meet."We need to sit down at table so that this war finally finishes after so long," said the retired doctor over dinner.
"Are there Russians or Communists amongst you?" barked the grey bearded man at the entrance, clutching an old sub-machine gun.The man, dressed as a soldier, offers visitors a glass of honey vodka -- "poison for the Moskals", he cackles -- before leading them to the cafe which seeks to imitate a Ukrainian nationalist hideout.The controversial Ukrainian Insurgent Army (UPA) are still revered as heroes in western Ukraine for fighting Soviet forces up to the early 1950s in the hope of creating an independent Ukrainian state.But their detractors accuse them of collaborating with the Nazis and taking part in deadly ethnic cleansing operations against local Polish citizens.Almost everything in the cafe is a reference to the UPA: the waiters are dressed in khaki, the crockery is metal and wartime weapons and photos adorn the walls.You can even fire a plastic bullet into the portrait of Soviet wartime leader Joseph Stalin, something Ukraine's First Lady Kateryna Yushchenko lost no time in doing when she visited."Before, we had a plaster head of Lenin to fire at. But it was completely destroyed in about two weeks of shooting and we still haven't purchased a new one," said senior waitress Anna Garbar.The existence of such a restaurant would be unimaginable in the east of Ukraine, where daily life is conducted mostly in Russian rather than Ukrainian and memories of the Soviet Union are fonder.For centuries part of the Polish Kingdom and then an important town of the Austro-Hungarian Empire, the beauty of Lviv's UNESCO-listed mediaeval centre is in stark contrast to the urban landscapes of most ex-Soviet cities.The city of Lviv and its region were only annexed into the Soviet Union during World War II and the city has grown into a Ukrainian nationalist stronghold since the country won independence.After the hopes of the 2004 Orange Revolution that ousted a corrupt old regime from power, political unity remains elusive in Ukraine partly because of the country's linguistic and cultural division.The divisions show no sign of becoming smaller. This month, the Freedom movement of Oleh Tyahnybok, known for his populist Ukrainian nationalist rhetoric, won a shock victory in local elections in a region neighbouring Lviv."Some Russian speakers are scared of coming in, while others try and speak as little as possible," laughs Garbar, who has worked as a waitress at the Kryivka since its opening in August 2007. "But once they see that no-one means them harm they relax," she said.For the cafe's founder and co-owner Yurko Nazaruk the aim is to "tell the true history about the UPA, which fought for the independence of western Ukraine."But he emphasises that this is done with a sense of humour and a light touch. "We wanted to stick the myth about our city -- that we kill Russians, that it's illegal to speak Russian in a street -- on its head."The UPA remains deeply controversial today and not just amongst historians.Moves by Ukraine's pro-Western President Viktor Yushchenko to rehabilitate its leaders have caused consternation in Moscow, which sees such groups as enemies in the fight against Fascism.In 2007, Yushchenko bestowed the title of Hero of Ukraine on the group's overall leader Roman Shukhevych, who was killed in 1950 in a shoot-out with Soviet security forces.Western Ukraine had again been part of Poland in the inter-war period, until Soviet troops ousted Polish forces in 1939. Nazi forces then took over the region two years later.Formed in 1942, the UPA initially welcomed the arrival of German troops as liberators from Communist oppression although Ukrainian historians insist the group then declared war on the Nazis.The group fought Soviet forces from its foundation up to the 1950s and is also blamed for killing thousands of Polish civilians in its conflict with the Armia Krajowa (Home Army, AK) non-Communist Polish resistance.The UPA's hatred of Communism is reflected in the cafe's menu, which includes delicacies like a "grilled KGB agent" or a fish speciality called "drunken Russian"."We are trying to show history as it is, and in no way do propaganda for Nazism," said the co-owner Nazaruk.And for most of the satisfied clientele, the cafe's references are more of a joke than anything else. For Vitali Tolstoy, one of the few native Russian speakers in Lviv, it is precisely the place where old enemies should meet."We need to sit down at table so that this war finally finishes after so long," said the retired doctor over dinner.
Russian Diplomat Found Dead In Southern Ukraine
ODESSA, Ukraine -- Russia's vice-consul in Odessa, southern Ukraine, was discovered dead early on Monday, local media said.
"It is true, the man passed away," a diplomatic source told RIA Novosti. "I can't tell you what happened, it is being investigated."Misto.Odessa.ua, the city's news portal, reported that Igor Tsvetkov, born in 1965, apparently hanged himself in the Russian consulate building in Odessa.The diplomat's wife and child are reported to have been in an adjoining room when the alleged suicide occurred.The local police department and the Russian consulate have yet to make an official statement.Tsvetkov, the vice consul in charge of bilateral cultural cooperation, was also rumored to be responsible for providing support to pro-Russian political parties in Odessa.This January media in the southern city reported that a briefcase containing official documents was stolen from the official's car.
"It is true, the man passed away," a diplomatic source told RIA Novosti. "I can't tell you what happened, it is being investigated."Misto.Odessa.ua, the city's news portal, reported that Igor Tsvetkov, born in 1965, apparently hanged himself in the Russian consulate building in Odessa.The diplomat's wife and child are reported to have been in an adjoining room when the alleged suicide occurred.The local police department and the Russian consulate have yet to make an official statement.Tsvetkov, the vice consul in charge of bilateral cultural cooperation, was also rumored to be responsible for providing support to pro-Russian political parties in Odessa.This January media in the southern city reported that a briefcase containing official documents was stolen from the official's car.
Ukraine Asks Japan For $5 Billion Dollar Loan
KIEV, Ukraine -- Japan is considering the possibility of granting 5-billion-dollar loan to Ukraine. According to Bogdan Danilishin, the Minister of Economics of Ukraine, this issue was discussed during the talks between Ukraine’s Prime Minister, Japan’s Finance Minister Kaoru Yosano and Japan's Prime Minister Taro Aso.
He also said Tymoshenko told Kaoru Yosano that Kiev hopes to deepen economic ties with Japan, which has a competitive edge over high-tech industries and energy conservation areas.This week Japan is likely to send its experts to Ukraine to define the terms of the loan."We have an agreement that this credit can be given on even more favorable conditions than IMF’s conditions," Bogdan Danilishin said.At the same time Yulia Tymoshenko dismissed reports that the country had taken on a begging role in negotiations with other countries and international organizations amid the current financial crisis."I would like to refute statements that Ukraine has taken on the role of a beggar," the premier told journalists on return from a visit to Japan, adding "Ukraine and Japan are building cooperation. There is no begging here."Ukraine has been hit hard by the global economic crisis with its currency, the hryvnia, depreciating 50% since September.Kiev received the first installment of $4.5 billion as part of a $16.43 billion IMF loan in November 2008, however, further payments have been delayed over the country's inability to prove to the IMF that Kiev is capable of reducing its budget deficit.Earlier it was reported that Ukraine had applied to Russia for a $5 billion loan to pay for natural gas deliveries.
He also said Tymoshenko told Kaoru Yosano that Kiev hopes to deepen economic ties with Japan, which has a competitive edge over high-tech industries and energy conservation areas.This week Japan is likely to send its experts to Ukraine to define the terms of the loan."We have an agreement that this credit can be given on even more favorable conditions than IMF’s conditions," Bogdan Danilishin said.At the same time Yulia Tymoshenko dismissed reports that the country had taken on a begging role in negotiations with other countries and international organizations amid the current financial crisis."I would like to refute statements that Ukraine has taken on the role of a beggar," the premier told journalists on return from a visit to Japan, adding "Ukraine and Japan are building cooperation. There is no begging here."Ukraine has been hit hard by the global economic crisis with its currency, the hryvnia, depreciating 50% since September.Kiev received the first installment of $4.5 billion as part of a $16.43 billion IMF loan in November 2008, however, further payments have been delayed over the country's inability to prove to the IMF that Kiev is capable of reducing its budget deficit.Earlier it was reported that Ukraine had applied to Russia for a $5 billion loan to pay for natural gas deliveries.
Sunday 29 March 2009
Signs of Ukraine's patchwork past
Ukraine is often said to be a country torn between east and west. Gabriel Gatehouse explores the political rifts still keenly felt today.
I was browsing through a street market in the western city of Lviv recently and, on a bric-a-brac stall, among the usual busts of Stalin and the hammer and sickle lapel badges, I caught sight of a German Iron Cross.
It had a swastika emblazoned in the middle of it, and as I picked it up - it was black and surprisingly heavy - a shiver literally ran down my spine.
There is something disturbing about coming across a genuine piece of Nazi history, when you are not expecting it.
Then I noticed that there was more of this stuff - medals, badges and belt buckles and the like.
I had not, however, stumbled on some neo-Nazi emporium of wartime memorabilia. These items were lying around all mixed in with Polish and Soviet-era knickknacks.
The stall simply stocked a representative cross-section of the debris of this region's turbulent recent history.
Deep divisions
Locals will tell you about the typical 20th Century Lvivite, who was born in the Austro-Hungarian Empire, grew up in Poland, got married under the Nazis, had children in the Soviet Union, and retired in independent Ukraine... all having never left the city.
But it is Lviv's two encounters with totalitarian regimes - with the Soviets and with the Nazis - that have left the deepest impression and divisions.
Near the railway station, there is a large bronze statue, erected two years ago, to a man called Stepan Bandera.
Here in western Ukraine he is revered as a national hero.
He led a guerrilla rebellion against Soviet rule from the hills around Lviv that continued sporadically into the 1950s. He was murdered by the KGB in Munich in 1959.
During the war, Bandera had initially been willing to collaborate with the Nazis in return for Ukrainian independence.
When it became clear that an independent Ukraine did not figure in Hitler's plans, Bandera pulled out and spent much of the rest of the war in a German concentration camp.
But other Ukrainian nationalists did collaborate and actively so. Some even joined a local Galician SS regiment, set up at the time of the German occupation. Moscow branded Bandera a Nazi and a traitor and that view is still widely held today, both in Russia and in eastern Ukraine.
The statue itself is strangely similar in style to the dozens of Lenin statues you see in other cities across this country.
In fact, it is entirely possible that the very bronze used to make Bandera was, in a previous incarnation, a monument to Lenin. In this part of the country, many were melted down in the early 1990s.
I had come here to meet Alexander Kalinyuk. Unlike most locals, he believes Bandera was a terrorist and a fascist.
He told me his own father had been injured in 1947, when Bandera's men tossed a grenade through the window of a nearby village council.
While we were talking, two uniformed police officers kept a very close eye on us. When Mr Kalinyuk left, they came up to me and said I should not believe a word of it.
"He's a Muscovite," one of them said with disdain. "People like him need to be destroyed."
Historical ambivalence
Some time later, in a cafe, I met a man wearing what looked like a fox-fur hat. Actually it turned out to be the whole animal, or rather its pelt - including legs and tail - wrapped around his head. Yuri Voloshchak is into his Ukrainian Cossack history.
Whatever the historical nuances, for many in this country these warriors' reputation for fearsome independence represents a golden era, when the land now known as Ukraine was free from Moscow's control.
Mr Voloshchak was wearing a red Cossack vest, embroidered with black and gold. The fox, I assumed, was all part of the look.
I wanted to talk to him about rumours that there were people from this part of western Ukraine who had volunteered to fight against the Russians during last summer's brief war in Georgia.
He had heard talk of it, he told me, but could not provide any specifics.
He seemed much keener to show me round a collection of Ukrainian military uniforms that a friend had assembled. So, in a building on the central square, Mr Voloshchak talked me through the various outfits, from Cossack chain-mail, to present-day Ukrainian officer-dress.
Somewhere in the middle, we sped past a mannequin wearing a dark grey trench-coat emblazoned with the insignia of the SS, Galicia regiment.
Again, I felt that same chill I had experienced at the bric-a-brac stall.
Mr Voloshchak did not dwell on the matter, nor did he skip over it.
He did not seem proud of it, but neither did he appear to feel the need to explain it in some way.
We moved on. Next up was the striped-pyjama outfit of a prisoner in a Russian gulag.
"Our Soviet-era uniform," he joked.
Many in central and eastern Ukraine find this western Ukrainian historical ambivalence very hard to swallow - the idea that the trench-coat and the Iron Cross represent the trappings of totalitarian subjugation no more and no less than the hammers and sickles that still adorn the facades of public buildings and the lapels of pensioners' jackets.
I was browsing through a street market in the western city of Lviv recently and, on a bric-a-brac stall, among the usual busts of Stalin and the hammer and sickle lapel badges, I caught sight of a German Iron Cross.
It had a swastika emblazoned in the middle of it, and as I picked it up - it was black and surprisingly heavy - a shiver literally ran down my spine.
There is something disturbing about coming across a genuine piece of Nazi history, when you are not expecting it.
Then I noticed that there was more of this stuff - medals, badges and belt buckles and the like.
I had not, however, stumbled on some neo-Nazi emporium of wartime memorabilia. These items were lying around all mixed in with Polish and Soviet-era knickknacks.
The stall simply stocked a representative cross-section of the debris of this region's turbulent recent history.
Deep divisions
Locals will tell you about the typical 20th Century Lvivite, who was born in the Austro-Hungarian Empire, grew up in Poland, got married under the Nazis, had children in the Soviet Union, and retired in independent Ukraine... all having never left the city.
But it is Lviv's two encounters with totalitarian regimes - with the Soviets and with the Nazis - that have left the deepest impression and divisions.
Near the railway station, there is a large bronze statue, erected two years ago, to a man called Stepan Bandera.
Here in western Ukraine he is revered as a national hero.
He led a guerrilla rebellion against Soviet rule from the hills around Lviv that continued sporadically into the 1950s. He was murdered by the KGB in Munich in 1959.
During the war, Bandera had initially been willing to collaborate with the Nazis in return for Ukrainian independence.
When it became clear that an independent Ukraine did not figure in Hitler's plans, Bandera pulled out and spent much of the rest of the war in a German concentration camp.
But other Ukrainian nationalists did collaborate and actively so. Some even joined a local Galician SS regiment, set up at the time of the German occupation. Moscow branded Bandera a Nazi and a traitor and that view is still widely held today, both in Russia and in eastern Ukraine.
The statue itself is strangely similar in style to the dozens of Lenin statues you see in other cities across this country.
In fact, it is entirely possible that the very bronze used to make Bandera was, in a previous incarnation, a monument to Lenin. In this part of the country, many were melted down in the early 1990s.
I had come here to meet Alexander Kalinyuk. Unlike most locals, he believes Bandera was a terrorist and a fascist.
He told me his own father had been injured in 1947, when Bandera's men tossed a grenade through the window of a nearby village council.
While we were talking, two uniformed police officers kept a very close eye on us. When Mr Kalinyuk left, they came up to me and said I should not believe a word of it.
"He's a Muscovite," one of them said with disdain. "People like him need to be destroyed."
Historical ambivalence
Some time later, in a cafe, I met a man wearing what looked like a fox-fur hat. Actually it turned out to be the whole animal, or rather its pelt - including legs and tail - wrapped around his head. Yuri Voloshchak is into his Ukrainian Cossack history.
Whatever the historical nuances, for many in this country these warriors' reputation for fearsome independence represents a golden era, when the land now known as Ukraine was free from Moscow's control.
Mr Voloshchak was wearing a red Cossack vest, embroidered with black and gold. The fox, I assumed, was all part of the look.
I wanted to talk to him about rumours that there were people from this part of western Ukraine who had volunteered to fight against the Russians during last summer's brief war in Georgia.
He had heard talk of it, he told me, but could not provide any specifics.
He seemed much keener to show me round a collection of Ukrainian military uniforms that a friend had assembled. So, in a building on the central square, Mr Voloshchak talked me through the various outfits, from Cossack chain-mail, to present-day Ukrainian officer-dress.
Somewhere in the middle, we sped past a mannequin wearing a dark grey trench-coat emblazoned with the insignia of the SS, Galicia regiment.
Again, I felt that same chill I had experienced at the bric-a-brac stall.
Mr Voloshchak did not dwell on the matter, nor did he skip over it.
He did not seem proud of it, but neither did he appear to feel the need to explain it in some way.
We moved on. Next up was the striped-pyjama outfit of a prisoner in a Russian gulag.
"Our Soviet-era uniform," he joked.
Many in central and eastern Ukraine find this western Ukrainian historical ambivalence very hard to swallow - the idea that the trench-coat and the Iron Cross represent the trappings of totalitarian subjugation no more and no less than the hammers and sickles that still adorn the facades of public buildings and the lapels of pensioners' jackets.
Ballerina Leaps Into Sochi Race
Ballerina Anastasia Volochkova announced Thursday that she will stand for mayor of the Black Sea resort of Sochi, bringing the number of candidates in the colorful election to 23. Volochkova, who made headlines in 2003 after she was fired from the Bolshoi Theater, reportedly because she weighed too much, submitted her documents and deposit to Sochi's elections commission on Thursday, she said in a statement. "I am going to stand to protect people," Volochkova said. "I am not the Kremlin's candidate. I am the candidate of the owners of small hotels and street cafes." Thursday was the last day for prospective candidates to register in the April 26 election, which will see several prominent political figures battling local and novelty candidates. Sochi is slated to host the 2014 Winter Olympics, a project for which the federal government has earmarked billions of dollars to almost entirely remake the underdeveloped resort. The race includes opposition politician Boris Nemtsov, businessman Alexander Lebedev and former presidential candidate Andrei Bogdanov, a Kremlin-friendly liberal and one of the country's leading Freemasons. Volochkova told reporters Thursday that as mayor she would focus on issues such as transportation, electricity and sewage dumping into the Black Sea. "I'm sure that with a professional team, we will make a good job of it," she said, Interfax reported. Volochkova, who has no political campaign experience but is a member of ruling party United Russia, first said publicly last week that she might run for the post. She told Gazeta.ru on Thursday that "continuing insistent demands from Sochi residents" for her to run prompted her to enter the race. Volochkova has never been particularly vocal about her politics, though in 2005 she signed an open letter calling for an end to criticism of the country's legal system over the conviction of former Yukos chief executive Mikhail Khodorkovsky. She is currently the prima ballerina at a musical theater in the city of Krasnodar, which is close to Sochi. Porn star and former reality show contestant Yelena Berkova submitted her documents and deposit Wednesday to enter the election, the producer of her television channel told The Moscow Times on Thursday. The producer, Alexander Valov, added that he did not know if her application would be accepted, since "she is a girl with a mixed reputation." A spokesman for the Sochi elections commission said Thursday, however, that Berkova's application had not been received. The April 26 election will be the country's last mayoral race in which candidates can submit a deposit to get on the ballot. Future elections will require candidates to submit signatures from supporters, a requirement that opposition candidates say allows for manipulation by election officials to prevent them from running for office. Candidates in the Sochi race had the option of submitting a deposit of 282,000 rubles ($8,400).
Central Bank Deputy Sees Interest Rate Cut Soon
Russia has come out of the sharpest phase of its economic crisis, capital outflows have ceased and foreigners are returning to Moscow stocks, Central Bank First Deputy Chairman Alexei Ulyukayev said Friday. He also indicated the economy may get a further boost from interest rate cuts, which could start as soon as the second quarter thanks to easing inflationary pressures. A collapse in growth and steady devaluation of the ruble has posed the biggest challenge yet to the popularity of Russia's Prime Minister Vladimir Putin, who stepped aside from the presidency last year. Officials now seem to be diverging in tone, with some taking heart from stabilizing oil, which pushes the ruble and stocks up and helps improve economic data, while others like Finance Minister Alexei Kudrin insist it is too soon to relax. "I think the sharp phase [of the crisis] has passed," Ulyukayev said in a interview on Ekho Moskvy radio station. "We may not like it very much because of falling industrial output … high inflation, but it is a balanced situation." "There is an inflow into the stock market — we see how quickly our bourses are growing in February-March — [and] foreign direct investments are continuing," he added. Russia's MICEX stocks index has surged 37 percent since the start of the year, while the broad MSCI emerging markets benchmark has added just 6 percent. Ulyukayev was also upbeat on the ruble, saying it could average 32-33 per dollar this year rather than the 35.1 level factored into the budget. The Central Bank has revised its 2009 capital outflows call and now expects them to be less than the $83 billion factored into the government budget. Its new forecast has not been made public yet, but Ulyukayev said it could be cut further. Russian officials have resisted calls for interest rate cuts to boost the economy as they dealt with a ruble sell-off, saying that the key refi rate should not be lower than inflation, which is currently running at an annual rate of 13 percent. Ulyukayev signaled that could change as price pressures are set to ease. "I think in the second quarter it is quite realistic to expect cuts in the official refi rate and in rates for most of our liquidity instruments. … The step of course will be small but it is important to signal a trend," he said. Risks remain, however, not least in the banking system, where the rise in non-performing loans is seen as a big threat. Ulyukayev said the Central Bank would urge financial institutions to take preventative measures by building up reserves against potential bad debts. He said as long as overdue loans do not top 10 percent of the credit portfolio, the banking system should be able to cope without major problems. "If it is more than 10 percent, then it is a problem for the banking system as a whole," he said, declining to give a forecast. Peter Aven, president of Russia's top private bank Alfa Bank, forecast bad loans could hit 15-20 percent by year-end. In an interview with the Financial Times he also predicted hundreds of bankruptcies in the 1,200-strong Russian banking sector
Military Intelligence Official Charged With Running Sex Slave Ring
An official with the Defense Ministry's intelligence branch has been charged with leading an international crime ring trafficking women as sex slaves, a senior investigator said Friday. The official, a colonel in the ministry's Main Intelligence Directorate, or GRU, led a crime syndicate that trafficked more than 130 women from Russia and former Soviet republics to work as prostitutes from 1999 to 2007, said Alexander Sorochkin, head of the Investigative Committee's military investigations directorate, RIA-Novosti reported. Sorochkin did not release the official's name. A total of 13 suspects in the case stand accused of human trafficking, running prostitution rings, forgery, organizing illegal migration and forcing women and minors to work as prostitutes under the threat of violence, Sorochkin said. Ten of the suspects have been placed under arrest, while the remaining three have been released after it was determined that they were not flight risks, he said. Repeated calls to the Investigative Committee's military investigations spokesman, Sergei Zhukov, and to the GRU press office went unanswered Friday. Defense Ministry spokesman Alexander Drobyshevsky said he had no information on the case. The crime syndicate sold women from Russia, Uzbekistan, Moldova, Ukraine and Belarus into sex slavery in several European and Middle East countries, including Isreal, Italy, German, Greece, the Netherlands and United Arab Emirates, Sorochkin said, RIA-Novosti reported. The countries to where the women were purportedly trafficked are major destinations for sex slaves from former Soviet countries, Afsona Kadyrova, a lawyer with the Angel Coalition, an umbrella organization of anti-trafficking NGOs operating in nine Russian regions, told The Moscow Times. In the past two years, the number of women trafficked from former Soviet countries to work in the sex trade has decreased due to rising living standards and increased awareness by potential victims about plots to lure women into forced prostitution, Kadyrova said.
Aeroflot Board Dismisses Embattled CEO
Aeroflot's board fired longtime chief executive Valery Okulov on Thursday and replaced him with Vitaly Savelyev, a Sistema executive with no previous experience in the aviation sector. The shuffle caps a weeks-long power struggle at Russia's flagship airline amid growing dissatisfaction over Okulov's leadership, including criticism of the carrier's failed bid for Alitalia in 2007 and a decision not to pay a dividend for last year. Minority shareholder Alexander Lebedev reversed his earlier opposition to Okulov's removal Thursday, saying many of the board's complaints against Okulov were well-grounded. "I've suggested many things to Okulov, and I was not listened to," he told The Moscow Times. Leonid Dushatin, the Aeroflot board member representing Lebedev's National Reserve Corporation, which holds a 30 percent stake in the airline and is its largest minority shareholder, said Tuesday that ousting Okulov would be "madness." "It's like putting out a fire with kerosene. There is no reason to do this right now," he said. Lebedev said Thursday that he had heard that Savelyev was a "good manager" and that he would "recommend him." It was not immediately clear what changes might be made at the airline under Savelyev, 53, first vice president at billionaire Vladimir Yevtushenkov's Sistema holding and a former deputy prime minister. Savelyev made no public comments Thursday. The removal of Okulov, 57, who spent 12 years transforming the state-controlled carrier from a Soviet-era behemoth to an airline that could hold its own against global rivals, drew criticism from Aeroflot executives alarmed at the consequences of removing a popular chief executive in difficult economic times. "Nobody can be the boss forever, but the way [Okulov] is being treated is not right," said a senior Aeroflot executive who asked for anonymity in order to speak candidly. "He was a popular chief executive, the company has grown under him and to unceremoniously get rid of him like that looks bad to the ranks and to the rest of the world." Aviation analysts said it was too early to say whether the shuffle would have a negative impact on Aeroflot. "You have to remember that the airline's strategy is decided by the board of directors. The CEO is only responsible for carrying it out," said Oleg Panteleyev, a researcher at Aviaport, an aviation consultancy. "If he is an effective manager, it could be even be a plus for the company." Natalya Sorokina, an aviation analyst at UralSib, said a good deal of the airline's fortunes would depend on whether any major management shakeups would occur after Okulov's departure. "Some [executives] are likely to be removed, of course, but there are others with a great deal of technical experience who will not be so easy to replace, and they will likely remain," she said. She said Okulov's removal could be the result of disagreements with the Transportation Ministry about Aeroflot's direction, namely, whether to place a greater emphasis on the development of domestic or international service. Interfax reported late Thursday that Okulov had accepted the post of deputy transportation minister, a relatively low-profile post for a decorated pilot who headed a blue-chip company and has 34 years of experience in civil aviation. Earlier this month, Transportation Minister Igor Levitin offered Okulov a job as one of his six deputies. Okulov, however, said last week that he was dedicated to Aeroflot and that it was too early to discuss his departure. "[Aeroflot] is not just a transitional phase in my life. It is my life," he told Vedomosti. The management change comes at a turbulent time for Russia's airline industry, which has been battered by a drop in passenger traffic and falling share prices in the financial crisis. Last year, the Moscow city government and Russian Technologies said they would create an airline out of 10 smaller regional airlines that would eventually serve as an alternative to Aeroflot. The new airline is being overseen by Sergei Chemezov, who as head of Russian Technologies has sweeping powers over Russia's industrial complex, including weapons, heavy machinery and now aviation. Okulov, however, criticized the creation of the new carrier, calling it a "pyramid scheme." Okulov is the son-in-law of late President Boris Yeltsin
RusAl Says It Won't Close Plant
United Company RusAl said Friday that it had no plans to close its Bogoslovsky Aluminum Plant after a local trade union and workers said Thursday that they were asked to accept significant salary cuts or else risk the plant’s closure. "We do not have current plans to close production at the Bogoslovsky Aluminum Plant," RusAl's press office said. "At the moment we are seeking the support of the staff for the tough but forced measures." Bogoslovsky’s union and workers said Thursday that the plant’s management threatened to close the smelter if they didn't accept salary cuts of up to 30 percent by April 10. A closure would cripple the economy of Krasnoturyinsk, a Urals town of 65,000 people where the plant is the main employer, and some workers said they were growing frantic. "The town will all die if they close the plant, but we will be forced to starve if we agree that our salaries be cut by a third," alumina shop operator Irina Milyutina, 33, said by telephone from Krasnoturyinsk, located 450 kilometers north of Yekaterinburg. "They are blackmailing us." The Bogoslovsky Aluminum Plant is the sixth-largest aluminum producer and the second-largest maker of alumina in Russia, and RusAl is the world's biggest producer of aluminum. A spokeswoman for RusAl said Thursday that workers have been asked to take a 25 percent pay cut but declined to say whether an ultimatum had been issued. "A temporary 25 percent reduction of salaries from June is being discussed with workers to keep the plant going," the spokeswoman said in written reply to questions. "The company has been subsidizing the plant for several months already," RusAl said Friday. "We have already cut management costs, revised the logistics schemes and are actively optimizing the supply component." The plant's chief executive, Oleg Burkatsky, met with workers on Monday and Tuesday to explain the need to cut salaries or possibly close the plant, said Valery Tushevsky, deputy chairman of the plant's trade union. He told workers to make up their mind by April 10. "We are not going to agree to a 30 percent cut," Tushevsky said. "It would be better for [RusAl CEO Oleg] Deripaska to sell his mansions in London than to victimize people over the global economic situation." He said plant workers were desperate. "They are ready for a strike, a demonstration, a blockade of the federal highway -- anything," Tushevsky said. Milyutina of the alumina shop said the plant CEO told the workers that he could not guarantee that RusAl would not close the plant even of their salaries were reduced. Milyutina said she would not be able to feed her two sons if she agreed to the salary cut. "I would get about 7,000 rubles [$210] a month then," she said. "I have to pay 4,000 rubles for my housing bills and 1,000 rubles for one son's kindergarten. What would I have left for food through the whole month?" She said many of the plant employees were in an even worse predicament. "They also have loans to pay off," she said. The trade union official said plant management has explained the cuts are needed because of a drop in world aluminum prices and an increase in electricity tariffs. "The chief executive told us that RusAl loses up to $1 million every day at its plants in Russia," Tushevsky said. RusAl plans to reduce its aluminum production by 11 percent, or 500,000 tons, by late April and has said it could cut it by a similar amount later this year if prices fall drastically. Aluminum prices have plunged by nearly 60 percent since July to $1,378 a ton on Thursday. Since then, RusAl has lowered production costs by 38 percent, and it says it intends to cut them by another 18 percent to $1,040 per ton by the third quarter. The RusAl spokeswoman said production costs at Bogoslovsky now stand at $1,672 per ton — among the highest in the company. Electricity accounts for 31 percent of expenses, while bauxite accounted for 36 percent, she said. "A recent 28 percent increase in electricity tariffs has become a burden for our production cost initiatives," she said. She said RusAl was holding negotiations with the Sverdlovsk governor and his administration about cutting electricity tariffs to their former level. Sverdlovsk administration spokeswoman Natalya Ponomaryova said electricity tariffs were being discussed but no decision had been made. RusAl has found itself in dire straits as it grapples to pay off its debt of $14.8 billion, including $8 billion due this year. The government said last week that it would not bail out the company. The RusAl spokeswoman said workers would get their old salaries back if aluminum prices grew to $1,500 per ton over the next three months and the plant managed to cut production costs to $1,000 per ton. Marat Gabitov, a metals analyst with UniCredit, voiced skepticism that the plant would be able to lower costs so significantly. "Given how outdated the equipment is at Bogoslovsky, it is unlikely that RusAl will get production costs of $1,000 there," he said. Russian law does not allow an employer to change a labor contract, including the terms of remuneration, because of a change in the financial position of the company, said Yulia Tsokol, a partner at the law firm Goremykina, Tsokol and Partners. "However, all the terms of a labor contract can be changed if there is an agreement between the company and the employees," she said. "If RusAl manages to persuade the employees, it will not break any laws."
Murky U.S. Money Could Boot Nemtsov From Sochi Race
A mysterious campaign contribution from a New York man could scuttle opposition politician Boris Nemtsov's bid in the increasingly bizarre mayoral race in the Black Sea resort Sochi, which is to host the 2014 Winter Olympics. Nemtsov received a $5,000 wire transfer on his bank account from a business registered near the Brighton Beach neighborhood of Brooklyn, NY. His campaign called the bank transfer a "Kremlin provocation" to keep him off the Sochi ballot under an election rule forbidding candidates from accepting campaign contributions from abroad. Nemtsov sent the money back to the United States on Friday afternoon, his press secretary told RIA Novosti. A scanned copy of the invoice obtained by The Moscow Times showed that the money was credited to Nemtsov's account with Sberbank on Wednesday from a Brooklyn-registered company called GBR Business Consulting. According to New York State public records, the company is registered to an apartment in near Brighton Beach, home to a large Russian-speaking community. The Internet telephone directory White Pages lists the apartment under the name Boris Glickstein, the same name given as a contact for a nearby Brighton Beach car dealership, Kings Jaguar. Reached by telephone Friday at Kings Jaguar, Glickstein confirmed to The Moscow Times that he had wired money to Nemtsov's bank account after he was "asked to make a contribution" by Nemtsov's campaign. "Yes, I transferred the money," Glickstein, speaking Russian, told The Moscow Times. "Don't discuss it with me, discuss it with them." Asked what he meant by "them," Glickstein said he meant Nemtsov's campaign team. "I was asked to make a contribution," he said, adding that he did not remember when or by whom. When told that candidates are not allowed to use campaign contributions from abroad, Glickstein said: "Well, let them return it then." "I do not have time to talk," Glickstein said tersely before hanging up. Opposition politicians have repeatedly accused election officials of manipulating election registration documents to keep them from running in elections. A common tactic, Kremlin critics say, is to rule invalid signatures from supporters that prospective candidates are often required to submit to get on the ballots. Mayoral candidates in the April 26 Sochi election, however, had the option of submitting a deposit of 282,000 rubles ($8,400) to join the race, which Nemtsov said he did in order to avoid being kept out of the election on technicalities. Nemtsov, a Sochi native, told The Moscow Times in a telephone interview Friday that he had never heard of Boris Glickstein. "I don't know this person. It is a provocation," Nemtsov said. The wire transfer came from an account with the bank JPMorgan Chase, according to the scanned copy of the invoice. Nemtsov said his campaign would ask JPMorgan Chase to investigate the origins of the money. Similar complaints will be sent to banks from which other such murky money transfers are made to his bank account, Nemtsov said. Nemtsov's spokeswoman, Olga Shorina, said the mysterious money was "absolutely a Kremlin provocation." A woman who answered the telephone at the Kremlin press service Friday said she would not comment. Shorina said Nemtsov's campaign first learned of the wire transfer from a report on the web site Yuga.ru, and that the money would be returned. The head of the Sochi elections commission, Yury Rykov, showed the copy of the invoice to a news conference Friday, Yuga.ru editor Anton Smertin told The Moscow Times in a telephone interview from Krasnodar. A spokeswoman for Sochi elections commission told The Moscow Times that election officials were aware of the wire transfer but that it would only be an election violation if Nemtsov used the money. The Sochi mayoral election has become one of the year's most intriguing political events, with several high-profile candidates joining the race. The field includes businessman Alexander Lebedev and former Bolshoi Theater ballerina Anastasia Volochkova. The next Sochi mayor will have a strong say over how the government will spend billions of dollars to build infrastructure for the Olympics. Deputy Prime Minister Dmitry Kozak, who oversees the preparations for the event, said recently that the Olympics budget amounts to more than 200 billion rubles ($5.7 billion). The Sochi vote could be a test for Solidarity, a loose umbrella opposition group formed in December and led by Nemtsov. After popular elections for governors were cancelled in 2004, mayoral elections allow the opposition perhaps its only chance to participate in big politics. Unidentified assailants ambushed Nemtsov on Monday, pouring ammonia over him as he made his way to a news conference in Sochi, the candidate and his supporters said. Nemtsov blamed the attack on the pro-Kremlin youth group Nashi, which is notorious for similar guerilla political stunts. Nashi said in a statement this week that it intended to sue Nemtsov for libel and is seeking 1 million rubles ($30,000) in damages. Four candidates were kicked out of the race on the grounds that they did not submit all of the necessary registration documents, the Sochi elections commission said Friday.
Moscow Delays Talks With Kiev Over Ukraine-EU Pipeline Deal
MOSCOW, Russia -- Russia is putting off government consultations with Ukraine, which were due next week, until its natural gas pipeline declaration with the EU is clarified, President Dmitry Medvedev said on Tuesday Ukraine and the European Union signed a cooperation declaration on Monday to modernize the ex-Soviet state's gas pipeline network. Russia, which transits about 80% of its Europe-bound gas via Ukraine, said it was excluded from the talks in Brussels."The consultations will take place after Russia has received answers to its questions," Medvedev told a Security Council meeting. "This declaration raises questions."Speaking at the meeting, Prime Minister Vladimir Putin said: "For our inter-government consultations to be effective, we need to clarify the situation."On Monday, Putin threatened to review ties with the EU if it continued to ignore Russia's interests.The EU endorsed Ukraine's plan to modernize its Soviet-era pipelines and underground storages and build new gas metering stations, for which Europe pledged 2.5 billion euros ($3.4 billion) and to encourage more investment on the condition Kiev reform the sector to make it more open and transparent.Ukraine also asked the EU to help build two more pipelines to increase the network's capacity by about 60 billion cubic meters to 200 billion cu m, a project it earlier estimated at $5.5 billion. Kiev says it is cheaper than building long-distance gas pipelines, such as Nabucco promoted by Europe and the Nord Stream and South Stream projects Russia has been pushing for.President Viktor Yushchenko said on Monday Ukraine would soon join the treaty on the common European energy system, raising fears in Moscow that Ukraine would be legally closer to the EU in the energy sphere.Some EU countries experienced disruptions in gas supplies in January as Russia briefly cut off shipments via Ukraine amid a debt and pricing row with its neighbor. The crisis fueled EU concerns on reliance on Russian energy.The Ukrainian prime minister said on Tuesday that Russia was welcome to invest in Ukraine's pipelines and modernize them."Russia can invest in and modernize the gas pipeline system," Yulia Tymoshenko told a news conference, adding that Moscow might not like some aspects of the cooperation agreement with EU, but the document did not run counter to Russia's interests.Tymoshenko said Monday's deal had ensured Ukraine's energy interests for decades.
Ukraine-EU Gas Deal Angers Russia
BRUSSELS, Belgium -- Ukraine agreed to clean up corruption in its gas export industry in return for Western investment in a deal with the EU on Monday that sparked a sharp warning from its powerful neighbour, Russia.Moscow warned it would "review" its relations with the European Union if Russia was left sidelined by the discussions here, which followed a winter dispute between Kiev and Moscow that disrupted gas supplies to Europe.Ukraine's President Viktor Yushchenko told government and industry officials in Brussels that he would "restore order" and "reject all corruption" in Ukraine, which needs billions of euros to upgrade its aging gas infrastructure.At a conference here on modernising Ukraine's gas infrastructure, it signed an agreement with the European Commission, the World Bank, the European Investment Bank and the Bank for European Reconstruction and Development.Under the deal, the Ukrainian gas transport company must prove its legal independence from outside influence, offering access to its pipeline at transparent prices that respect European norms.However, Ukraine has no intention of giving up ownership of the major strategic asset, through which passes 80 percent of the gas sent by Russia to the European Union.Putin slammed the agreement as "unprofessional," in comments reported by Russian news agencies after the Brussels meeting, and warned Moscow could review its ties with the bloc."If the interests of Russia are going to be ignored then we will be compelled to begin to review the principles of our relationship," Putin was quoted as saying in the southern city of Sochi.European confidence in Ukraine as a gas-transit partner country suffered a blow in January when Moscow cut off deliveries to Ukrainian consumers and transit supplies amid a row with Kiev about new prices and debts.Several EU states were left without Russian gas for two weeks."We cannot allow our citizens to face fuel shortages in the depth of winter again," EU External Relations Commissioner Benita Ferrero-Waldner told the conference in Brussels."All of us... have an interest in ensuring Ukraine provides a reliable and secure transit route for gas in decades to come."The agreement lays out the commitments that Kiev is to make to pave the way for much-needed foreign investment in its gas pipeline network.Yushchenko said he intends to have metering stations set up along transit pipelines in Ukraine and open up access to the country's substantial underground gas storage facilities.Putin scorned the new agreement. "It seems to me that this document ... is at the very least not thought-out and unprofessional," he said. "To discuss questions of supplies without the main supplier is simply not serious."Moscow is currently involved in several gas pipeline projects with European companies, such as the Nord Stream project which aims to bypass Ukraine with a pipeline beneath the Baltic Sea to Germany.The EU wants to tread carefully with Kiev and Moscow as it seeks to diversify its sources of gas shipments by backing the Nabucco pipeline that will bring gas from the Caspian through Turkey.Ukrainian Prime Minister Yulia Tymoshenko said building new pipelines bypassing Ukraine would be much more expensive than updating Ukraine's network.Ukraine is seeking more than 5.5 billion dollars (4.1 billion euros) to expand its gas pipelines, but refuses to give up ownership of the infrastructure.The Russian foreign ministry had already warned in a statement that the agreement could push up gas prices for Ukrainian and European consumers and disrupt supplies."If this is just a little technical hitch in the already quite complicated trilateral relations between Russia, Ukraine and the European Union then no matter," Putin said on Monday."But if this is the start of an attempt to systematically ignore the interests of the Russian Federation then that is very bad."
Chernobyl Taking A Toll On Invertebrates Too
CHERNOBYL, Ukraine -- Most of the talk about the ecological aftermath of the Chernobyl nucleaRecent research has refuted the idea that the region around the power plant, contaminated by radiation and off limits to most humans, has become a sort of post-apocalyptic Eden for deer, foxes and other mammals and birds.A new study by the same researchers shows that it’s not much of a paradise for invertebrates, either. Anders Pape Moller of the University of Paris-South and Timothy A. Mousseau of the University of South Carolina report in Biology Letters that the abundance of insects and spiders has been reduced in the area.The researchers conducted standard surveys in forests around Chernobyl over three springs from 2006 to 2008, noting the numbers of bumblebees, butterflies, grasshoppers, dragonflies and spider webs at points with radiation levels that varied over four orders of magnitude.After controlling for factors like height of vegetation and type of soil, they found that abundance declined with increasing radiation intensity.The decline was noticeable even in areas with relatively low levels (about 100 times normal background), which suggests that invertebrates are highly sensitive to radiation.The researchers note that most of the radiation in the area is in the top layer of soil, and given that many invertebrates spend much time in or near soil — as eggs, larvae or adults — that could explain the decline.r accident in Ukraine has been about the impact of the 1986 disaster on animals.
EU To Upgrade Ukraine's Outdated Gas Pipelines
BRUSSELS, Belgium -- The EU vowed Monday to help upgrade Ukraine's network of gas pipelines in exchange for reforms in the country's energy management to avoid a repeat of the JanuarThe two sides signed an agreement to improve both the management and capacity of Ukraine's 40-year-old grid of gas pipelines. In return for embracing market economy practices, Kiev can expect billions of euros (dollars) in funding and western expertise on how to run a profitable -- and reliable -- energy sector.The EU did not say how much it would commit for the work. Ukrainian Prime Minister Yulia Tymoshenko said the project would need euro 5.5 billion, while the EU has costed it at euro 2.5 billion, without setting a figure on the final bill.Ukrainian gas pipelines carry domestic supplies but also Russian gas to Western Europe. A fifth of gas consumed in the EU comes from Russia through the Ukraine.Ukrainian President Viktor Yushchenko said "we are determined to improve the functioning of the gas market and root out all kinds of corruption and make sure that the system works to the benefit of all."A key priority, he said, was building gas metering stations to improve the monitoring of gas passing through Ukrainian pipelines.Yushchenko signed the gas agreement with European Commission President Jose Manuel Barroso.It aims to improve both the safety and capacity of Ukraine's pipeline network and revamp its management so western investors can put up money without fear of losing any of it to endless red tape or corruption.This year, Ukraine plans to join the European Energy Community, which sets common trade rules for producer and consumer nations. It means that by 2012, Ukraine's energy laws must comply with market economy standards.That -- plus cuts in excessive domestic consumption -- will boost exports, especially from the Black Sea region, and make "Ukraine a predictable market" for Western Europe, said Ukrainian Energy Minister Yuriy Prodan.Energy supply is a sensitive political issue in the region, and the EU-Ukraine deal quickly triggered Russian misgivings about being sidelined in its own backyard.Ukraine's gas pipeline network "has an organic link with Russia," Russian Energy Minister Sergei Shmatko told a conference at which the EU-Ukrainian gas declaration was signed.The EU-Ukraine agreement is part of a web of cooperative deals the EU is seeking with Russia's immediate neighbors for fear that Moscow's enduring sway in ex-Soviet republics hampers across-the-board reforms."We are working for safe and attractive conditions for the transit of Russian gas," said EU Energy Commissioner Andris Piebalgs. "There is no intention to exclude Russia."EU officials were pleased both Yushchenko and Ukrainian Prime Minister Yulia Tymoshenko -- his political rival -- showed up for Monday's signing ceremony.Yushchenko has accused Tymoshenko of delaying repayment of debt to Russia worth $2.4 billion ($3.3 billion) for gas imports, saying that leaving it unpaid makes Ukraine a colony of Moscow. The state gas company Naftogaz, which answers to Tymoshenko, disputes the size of the debt."Today's participation of the prime minister and the president shows that in some issues they are united," said Piebalgs.Tymoshenko told the EU that modernizing her country's outdated gas pipelines -- which span 37,600 kilometers and comprise 73 compressor stations and 13 underground storage facilities -- will cost euro 5.5 billion ($7.5 billion). She said that was cheap compared to building alternative pipelines, as the EU is contemplating.The European Commission has provisionally costed Ukraine's modernization program at euro 2.5 billion ($3.4 billion).y dispute which resulted in the cutoff of Russian gas deliveries to Europe.
Ukraine's President And Prime Minister Feud As Their Country's Economy Sinks
KIEV, Ukraine -- In Ukraine, it’s truly noteworthy only when the president and prime minister stop fighting.President Viktor Yushchenko and Prime Minister Yulia Tymoshenko — who stood shoulder-to-shoulder just four years ago as Orange Revolution allies — have spent the better part of the last year at each others' throats, in a vituperative, take-no-prisoners struggle that has split the government down the middle and paralyzed the country’s political process.The situation would be humorous if it were not so critical: Hardly a week seems to go by without some sort of outburst from the president (or his minions) against the prime minister (and her backers). The two camps regularly hurl back and forth phrases like “criminal,” “traitor,” “con artist” and “idiot."Meanwhile, Ukraine is facing its biggest economic challenge since the economic drought that immediately followed the Soviet Union’s breakup.Industrial output declined by 30 percent year on year this January. The national currency, the hryvnia, has lost half of its value since highs last year. Banks have stopped lending, and many are permitting only miniscule withdrawals, to head off a run on banks. Factories, shops and businesses throughout this eastern European country of 46 million are closing their doors, while unemployment and public dissatisfaction are spiking.“Re-arranging the deck chairs on the Titanic,” “Fiddling while Rome burns,” — so the local and international press describe the Ukrainian morass.The Ukraine-Russia gas dispute was interpreted by many partially as a product of the two leaders’ struggle. In February, the second tranche of a critical $16.5 billion International Monetary Fund bailout program fell through because of infighting in the government. Finance Minister Viktor Pynzenyk, a Yushchenko ally, resigned in protest. Tymoshenko accused the president of spreading “falsehood, panic and hysteria.”Earlier this month, agents from the Ukrainian Security Service (SBU), some wearing baklavas and brandishing automatics, stormed the offices of state energy company Naftogaz.At issue was the ownership of a large amount of natural gas — between 6.3 and 11 billion cubic meters, depending on which report you read — valued at about $1 billion. The SBU said the gas belonged to RosUkrEnergo, a shadowy Swiss-based company with reputed ties to Yushchenko and other top politicians, while Naftogaz said it was the rightful owner.But since the SBU answers to the president — and just a few weeks earlier Yushchenko named a close ally, media magnate Valery Khoroshkovsky, as the SBU’s deputy head — and Naftogaz comes under the prime minister’s aegis, this was viewed as just another clash in the two leaders’ battle royale, albeit with the new, extremely disturbing development of involving the country’s law enforcement bodies.“This is not new,” said Yuri Yakymenko, director of political and legal programs at the Razumkov think tank, adding that the struggle originally reached fever pitch and stayed there when the president tried to dissolve parliament last autumn and called for new elections. “Unfortunately the fight among the political groups has witnessed a drop in legitimacy for the whole political system.”The current sparring is believed to be a preview of the presidential elections, scheduled for January next year. Tymoshenko is the front-runner, though her position takes a beating with every new piece of jaw-droppingly horrible economic news. Yushchenko for his part incredibly appears still to be considering re-election — or at least he has not said that he will not run – although his approval ratings are at 2.5 percent. (That could mean zero or lower, when you factor in the margin of error.)For this reason — and maybe because they at times actually are concerned for the future of their country (though this is not a given) — the two leaders have occasionally set aside their differences. Most recently this happened in the wake of the IMF bailout delay. Yushchenko and Tymoshenko issued a joint statement laying out a unified economic reform program. Both leaders now say they are confident that the country will receive the second $1.8 billion payment.The damage to both leaders’ reputations — in fact to the whole ruling class — has been irrevocable. Ukrainians will say in one breath that they want to be part of Europe and the West, but at the same time that they are disillusioned with the Orange Revolution, capitalism, as it is now practiced in their country, and even democracy.On Kiev’s central Independence Square, where hundreds of thousands gathered in 2004 to protest a stolen election and sweep Yushchenko and Tymoshenko to power, a few tents have stood since January. They are part of a movement called “All of them — Out!,” which seems mostly to be made up of groups from the nationalist fringe.“All of our leaders must go and be replaced by new forces,” said Nadezhda Batolkina, a movement member. As the weather warms, and with demonstrations expected throughout the country, we will soon know to what extent others agree with her.
How The West Turned From Kiev
KIEV, Ukraine -- Just five years ago Ukraine was the toast of pro-democracy politicians the world over. The Orange Revolution seemed to be the next strand of the thread going back to the 1989 Velvet and other peaceful European transitions. Despite the bullying of Moscow, the Ukrainians stood their ground and said they wanted to become another Euro-Atlantic nation.But now, like parents with a sulky, wayward child who just won't grow up, the world's democracies are turning their back on Ukraine. U.S. President Barack Obama will clink glasses with Russian and European leaders in London, Strasbourg and Prague and drop in to say hello to Turkey.But Ukraine, Turkey's Black Sea neighbor, is off his radar. Silvio Berlusconi openly supports Russia every time there is a dispute over gas. Angela Merkel used to visit Ukraine regularly and hold annual Berlin-Kiev summits, but now she ignores the country.Russia's ambassador to NATO, the ultranationalist Dmitry Rogozin, boasted to France's Nouvel Observateur that French President Nicolas Sarkozy "opposed America's desire to see Ukraine join the Atlantic alliance," adding that the French president was "Moscow's ally in Europe." That may be just Russian bombast, but increasingly Kiev looks west and sees no alternative.Yes, Ukraine faces many internal domestic problems that the EU and the United States are largely powerless to influence. Its economy is a shambles. With 40 percent of GDP linked to steel and aluminum, it is seeing a nose dive into negative growth as exports slump.Ukraine's politicians squabble openly and try to tear each other down. Yet everyone in Kiev agrees that democracy has sunk deep roots. Ukraine has its oligarchs who wheel and deal and buy influence, but they live in their own country and not (as has happened to some of their Russian counterparts) in exile in London waiting for a dose of plutonium to arrive with the coffee or banged up in a Russian prison.There is no state police, journalists at last are free, and Kiev sparkles and looks more energetic and full of well-dressed people, bustling stores, offices and public spaces and new cars—despite the recession. Unlike neighboring Georgia, which remains a favorite of the West, Kiev avoids provocation.It has abolished nuclear weapons.It has sent troops to all NATO missions. Ukrainians have remained calm about Russia's Black Sea fleet, and they are fed up with being linked to Georgia as if they were a double act, when Ukraine has a stand-alone claim to be taken seriously as a European nation that wants to fit in with the Euro-Atlantic community.There was once real hope that Europe meant it when a procession of visitors from Brussels and other EU capitals said Ukraine was en route to a European future. But the West got frightened last August, after the Russian invasion of Georgia, and bought into the Russian line that plans to admit Ukraine to NATO meant trouble and strife—though this had also been the Russian line on NATO membership for Poland, the Baltic states and Black Sea nations like Bulgaria and Romania.Now this kind of nyetpolitik is getting the upper hand. Earlier this month U.S. Secretary of State Hillary Clinton staged a photo op with her opposite number from Moscow pressing a "reset" button. But reset for Moscow means a free hand to dictate Ukraine's internal affairs.Clearly, the Kremlin has never adjusted to the idea that Ukraine is its own nation—"whole and free," to use the first President Bush's phrase about the nations that emerged after the end of Sovietism. Russian leaders still think of Kiev as Russia's "mother," compared to its heart in St. Petersburg and brains in Moscow.And, obviously, Russia matters more than Ukraine to both Obama and Europe. On Iran, on nuclear-weapons treaties, on transit access to Afghanistan, Russian cooperation is the goal of post-Bush foreign policy. But help for Ukraine can come in the form of soft power. EU leaders can visit more and encourage trade and investment.Brussels might end a repressive EU visa regime that means a Ukrainian university professor who used to need only a multiple-entry visa to go repeatedly to universities in Western Europe must now apply for each single trip. The Ukrainian military needs help to modernize, and it should get that help as a thank-you for taking part in NATO missions.Indeed, with Russia breathing down its neck, the last thing Kiev needs is for Paris and Berlin and Washington to create a new axis of complacency that uses the incoherence of Ukrainian politics to justify accepting the Moscow world view that places Ukraine firmly in Russia's sphere of influence.What's needed now is a new policy that treats Ukraine, warts and all, as a European nation. Instead of listening to the nyet from Moscow, the United States and the EU need to start saying da to Kiev's moderate and modernizing politicians.Certainly this will be hard for Moscow to accept, but bringing Ukraine into Europe—in the full sense of a path toward EU and NATO membership—might even help encourage Russia to see itself as a future partner of the EU and the United States, in place of the scratchy rivalry Moscow now creates in the Euro-Atlantic community.
Monday 23 March 2009
At Least 17 Slain in Dagestani Battle
MAKHACHKALA -- Three days of intense fighting between police and insurgents in a wooded area of Dagestan ended Saturday with five officers and about a dozen militants left dead, officials said. Clashes are frequent in Dagestan, but the fighting in an area near the border with Georgia and Azerbaijan was some of the most intense in recent months. Helicopter gunships fired on the militant positions. Regional Interior Ministry spokesman Mark Tolchinsky said 14 insurgents were killed, but Interfax cited the Federal Security Service as saying 12 died. "The group committed several crimes in two regions in Dagestan," Dagestani Interior Minister Adilgirei Magomedtagirov told reporters. "There are at least three non-Russians with Arab nationality among the dead militants, perhaps even four," he said. State-owned Vesti-24 television showed a row of dead rebels lying in the snow with Kalashnikov rifles slung across their limp shoulders. Magomedtagirov said a collection of Kalashnikov rifles, machine guns and a sniper rifle were found where the militants were hiding. Earlier, television showed helicopter gunships firing from the snowy skies at targets in a forest and armored vehicles rolling into the mountainous area. The police action, which began Wednesday, came after officials in the regions complained to regional authorities about the presence of the gunmen. Underscoring the seriousness of the fighting, state-run television prominently showed a meeting Friday between Prime Minister Vladimir Putin and Dagestan's leader, Mukhu Aliyev. In the Dagestani capital, Makhachkala, police fatally shot four men Friday who failed to stop their car at a checkpoint and began shooting at officers, city police spokesman Shamil Guseinov said. The bodies of the four were shown on television lying among shattered glass near a battered, white Lada car. Dagestan's militants are seen as having been inspired by separatists in neighboring Chechnya. The fighting is the latest round of violence to plague the North Caucasus, pitting criminal gangs, Islamic militants or feuding clans against one another or against government and police forces. A three-hour shootout Thursday north of the capital of Kabardino-Balkaria left four gunmen killed.
Yakunin Slams Freight Car Maker
Russian Railways chief executive Vladimir Yakunin on Friday lashed out at Uralvagonzavod for its quality control standards, a day after Russia's largest maker of rail freight cars accused the state railway monopoly of buying fewer units than stipulated in a supply contract. The increasingly heated dispute between the companies, both 100 percent controlled by the state, comes as Russian Railways, or RZD, struggles to cope with falling revenues from weaker cargo volumes. RZD was loss-making in January for the first time since it was created in 2003. "Just yesterday ... a train went off the rails because a side frame broke on a car made in 2007. It just goes to show how disorderly the oversight is at [Uralvagonzavod] and how awful the technology is," Yakunin said in Novosibirsk, Interfax reported. "The management of the factory should, first of all, focus on running that business and only then try to lay the blame for their own headaches on other people's shoulders," Yakunin said. Uralvagonzavod said Thursday that it would have to halt its freight car assembly line in April -- potentially leaving more than 11,000 people out of work -- because RZD was refusing to buy any more units. A spokesman for the Sverdlovsk region plant, which also makes tanks and oil cisterns, said he thought that Yakunin was just looking for a pretext to reduce his company's orders. "We've significantly improved our production and oversight of our technological processes with European equipment," Uralvagonzavod spokesman Boris Mineyev said. "The Russian wagon-making has its problems, but they are common to all producers, and it's not a reason to refuse to buy from us." According to a copy of the contract obtained by The Moscow Times, Uralvagonzavod was supposed to supply RZD with 13,600 cars for 22.7 billion rubles ($672 million) this year. An RZD spokesman said the monopoly would buy 8,800 cars, while Uralvagonzavod said RZD would buy only 4,000 cars and 2,000 cisterns from them. A competing supplier to RZD said Friday that the state railways had already used the bad-quality argument to buy fewer cars. "Russian Railways has ordered 30 percent less from us this year," said Artyom Ledenev, spokesman for Transmashholding, RZD's biggest supplier. Gudok, RZD's official corporate newspaper, said March 2 that the orders for locomotives from Transmashholding were reduced in part because of quality issues, citing Sergei Palkin, the head of RZD's technical auditing center. Transmashholding cut production by 30 percent and was working four-day weeks because of the weaker demand. A Russian Railways spokesman insisted that the main reason for not ordering as many cars this year was money rather than quality. "We haven't got enough money to buy as many cars as we planned," the spokesman said. Yakunin also sought to comfort his company's disenchanted suppliers. "If the economic situation gets better, we will increase our investment program," he said. The company said it would decrease its investment program by 34 percent, to 262 billion rubles ($7.8 billion), down from 400 billion rubles the government approved in November.
Baturina to Sell Blue Chip Stakes
Inteko owner Yelena Baturina, one of the largest private shareholders in Gazprom, Sberbank and Rosneft, is prepared to sell her stakes in the Russian blue chips to pay back a loan from Gazprombank. The real estate developer owes Gazprombank about 15 billion rubles ($450 million), which is approximately half of Inteko's overall debt, Baturina said in an interview. Gazprombank was willing to restructure the loan, but only at an annual rate of 18 percent instead of the earlier 8 to 10 percent, she said, adding that "it's tough to work" with that kind of debt load. Instead, Inteko has decided to return the loan by either selling Baturina's stakes in Gazprom, Sberbank and Rosneft or by handing over the shares themselves. On Friday, Baturina's stakes in the three companies were worth a combined 18.5 billion rubles on the MICEX exchange. The loan from Gazprombank was supposed to be returned in March, but Inteko negotiated a suspension until the summer, a source close to the developer said. In addition to Baturina, Sberbank's largest private shareholders are Filaret Galchev, Suleiman Kerimov, Alisher Usmanov and Vadim Moshkovich. Last summer, Galchev held 1.85 percent in Sberbank, which is currently serving as collateral for a loan, a Eurocement official said. A spokesperson for Usmanov said his 1 percent in Sberbank and 1.5 percent in Gazprom were also being held as collateral, and that he was not planning to sell the stakes. Sberbank chief German Gref has said Kerimov's Nafta-Moskva holding has 1.5 percent to 2 percent of the state bank. Kerimov and Moshkovich were not immediately available for comment. Baturina bought her shares over the course of several years, and since the second half of 2008, they have been in the closed mutual fund Kontinental. In addition to the blue chips, the fund has Inteko shares, as well as stakes in energy and engineering companies. Baturina said some shares of Kontinental were also held as collateral for the Gazprombank loan, although she declined to say how many. A Gazprombank spokesperson declined comment. According to the mutual fund's disclosures, on Dec. 31, 2008, Kontinental had 0.44 percent of Gazprom, 0.387 percent of Sberbank and 0.03 percent of Rosneft. Sberbank shares are also on the balance sheets of other companies whose shares are in the mutual fund, an Inteko official said, bringing the stake in Sberbank to just less than 1 percent. On Friday on the MICEX the Sberbank stake was worth 5.12 billion rubles; 0.44 percent of Gazprom was valued at 12.97 billion rubles and 0.03 percent of Rosneft was 451.5 million rubles, for a combined 18.5 billion rubles. "I've bought stocks primarily with the money I received from selling cement assets. … I never would have made that much on cement factories," Baturina told Vedomosti in 2007. In April 2005, she passed those assets to Eurocement chief Galchev for $800 million. Inteko disclosures said Baturina's assets rose by 13.6 billion rubles in the second quarter of 2005 because of her purchases of Gazprom and Sberbank shares. Baturina said she would be closing her blue chip positions with a profit. Since April 2005, Gazprom shares are up 56 percent, and Sberbank shares are trading 27 percent higher. She said she was hoping that the country's stock market would begin rising again by the end of the year, in which case she would return as an investor. "What you do with shares is a personal decision for every shareholder," Rosneft spokesman Nikolai Manvelov said. Spokespeople for Gazprom and Sberbank declined to comment on the matter.
Murmansk's Governor Resigns
Murmansk Governor Yury Yevdokimov resigned abruptly Saturday after enduring a week of harsh criticism from United Russia over the loss of the Murmansk mayoral election to an independent candidate. President Dmitry Medvedev welcomed Yevdokimov's resignation and appointed Federal Fisheries Agency deputy head Dmitry Dmitriyenko as the acting governor, the Kremlin said. Political analysts said it was the first instance that a regional leader had been forced out of office for supporting a non-United Russia candidate in an election. Independent candidate Sergei Subbotin, a former Murmansk deputy governor, was elected mayor with 61 percent of the vote in a runoff election on March 15, well over the 35 percent collected by the United Russia candidate, incumbent Mayor Mikhail Savchenko. After the election, the new mayor refused to join United Russia but declared himself a supporter of Prime Minister Vladimir Putin, who heads United Russia. Yevdokimov, a United Russia member, had served as Murmansk governor since 1996 and was appointed by then-President Putin to a fourth term in 2007. In an interview with Gazeta.ru on Thursday, he denied speculation that he would step down. But on Saturday, he said he thought that it would be best for the country if he quit. "I've always been ready to bear responsibility for my actions," he said, Interfax reported. Senior United Russia officials had accused him of violating election law by offering support for the non-United Russia candidate on local television and threatened to throw him out of the party. United Russia said in a weekend statement on its web site that Yevdokimov had resigned on his own accord. The acting governor, Dmitriyenko, 46, served in submarine units of the Navy from 1980 to 1992 and was appointed as deputy head of the Federal Fisheries Agency last year. United Russia welcomed Dmtiriyenko's appointment. "There is a need for professionals able to work in new ways during crisis conditions," party official Sergei Neverov said in the web site statement. Dmitriyenko will be sworn in as governor on Wednesday, pending confirmation by the regional legislature, which is controlled by United Russia. Dmitriyenko flew to Murmansk on Saturday to meet with regional United Russia officials. In his first official statement as acting governor, Dmitriyenko said he would focus on ways to make regional spending more effective. Alexei Titkov, regions analyst at the Institute of Regional Politics, said the shuffle was the first time that a governor has been replaced after a conflict with United Russia over support of a candidate in elections. "Yevdokimov's resignation will become an example for the other governors," Titkov said. The resignation follows a series of replacements started when Medvedev dismissed four governors in February. The president has the right to appoint and dismiss governors under a law proposed by Putin in 2004. Meanwhile, the State Duma on Friday approved in a final third reading a bill that would give the party that holds the most seats in a regional legislature the right to propose gubernatorial candidates. Under the existing procedure, this right belongs to the presidential envoys to the federal districts. The bill, which now must be approved by the Federation Council and then the president, says the party should propose at least three candidates to the president no later than 90 days before the incumbent governor's term expires. If the president doesn't select anyone from this group within a month, the party must propose three more candidates. If the party doesn't do this, the president can select the candidate himself. Also, the president is not obliged to select a candidate from those proposed by the party. The bill was sent to the Duma in December by Medvedev. United Russia controls nearly all the regional legislatures in Russia.
New U.S. Airline Cleared to Fly to Petersburg
Major airlines are slashing prices and grounding planes to remain profitable in the tough global economy. But a group of investors believe that the time is ripe to launch a new airline offering flights between New York and St. Petersburg. Baltia Air Lines has won approval from the U.S. Transportation Department to provide nonstop service between New York's John F. Kennedy International Airport and St. Petersburg's Pulkovo 2 Airport, and the flights will start this summer, the airline's chief executive, Igor Dmitrowsky, told The Moscow Times. The airline will initially offer the round-trip flights once a week on a Boeing 747, later expanding to three days per week and then five days per week, Dmitrowsky said. The eight-hour flight will be the first direct connection between St. Petersburg and any city in North America, which Dmitrowsky sees as an unfilled niche that will give the airline an advantage. Dmitrowsky said the economic downturn would also make Baltia competitive. "Frankly, these are the best of times for us. The fuel price has gone down dramatically, and the other costs are not so extreme," Dmitrowsky said by telephone from New York. "Can you imagine if we were living in an era where Pan Am was flourishing along with other major airlines with no debt?" he said. "We would have such a hard time breaking into the market and an even harder time staying afloat." Baltia intends to offer three-class service in its aircraft, which will feature a white fuselage with a red tail emblazoned with a white rooster, representing punctuality. The airlines currently offering direct flights to the United States -- Aeroflot, Delta Air Lines and American Airlines -- provide two-class service. A fourth carrier, United Airlines, will start flights to Russia next Sunday after postponing the Washington-Moscow route last year because of high fuel costs. Oil prices have dropped from a high of about $150 last summer to around $50 last week. But the financial crisis has since enveloped the global economy, discouraging business and leisure travel and forcing airlines to cut prices and capacity. Last week, United Airlines slashed prices to mark the start of the new daily flights between Washington's Dulles Airport and Moscow's Domodedovo Airport. Sample fares on the airline's web site show one-way tickets to Moscow via Dulles costing $119 from New York and $167 from Los Angeles. The tickets must be purchased by Thursday, and travel is between March 29 and April 30. Several other airlines dropped their prices below $500 for round-trip flights to Moscow last week, said Rick Seaney, chief executive of FareCompare.com. Seaney linked the price cuts to the crisis. "You have to understand that this is an absolutely crazy airfare environment," he said in a column on the ABC News web site. "The airlines are trying to fill up their planes, but people are procrastinating -- while others just aren't flying. ... So we get the yo-yo price game: When nobody's buying tickets, prices take a dive." He said he found American Airlines offering one round-trip fare of $205 from Baltimore to Moscow. Baltia's ticket costs will remain "along the lines of the current price structure on carriers with connecting services," Dmitrowsky said. But Baltia's web site is already promoting a host of discounts to students, seniors and youth. During the first month of service, all passengers will receive 25 percent off the ticket cost, and the first 300 passengers to book flights will receive a free ticket for future use. The date for Baltia's inaugural flight remains to be set, pending approval of its air certification documents from the Federal Aviation Authority, Dmitrowsky said. He said approval was expected within three months. The airline, based in Rego Park, New York, will start service with a single 747. It hopes to start nonstop flights between New York and Moscow, Kiev, Minsk and Riga next year. Dmitrowsky, a U.S. citizen born in Riga, founded a kefir company in 1979 and led it to a public offering in 1986. He has financed several aircraft and automotive projects, but his dream for nearly 15 years has been to launch Baltia. Baltia's shares, which trade on the "over-the-counter bulletin board" electronic system, closed up 20 percent at $0.04 on Friday after seeing a 52-week low of $0.01 on Nov. 12 and a high of $0.07 on March 24. Dmitrowsky faces an uphill battle. Airlines could lose more than $2.5 billion in 2009 after cargo volume dropped by 23 percent and passenger traffic fell by 5.6 percent in January, the International Air Transport Association said last week. Aviation industry insiders questioned the wisdom of United Airlines' plans to fly to Russia when they were announced last year, noting that flights between Moscow and the United States were rarely filled. United Airlines said at the time that planes on the Moscow flights would carry a combination of passengers and freight, making the route profitable. American Airlines started flights to Moscow from its home base in Chicago last year. Delta has been flying between Moscow and two U.S. cities, New York and Atlanta, for years.
Prokhorov Ups RusAl Stake to 18.5%
Mikhail Prokhorov's Onexim Group has agreed to increase its stake in United Company RusAl to 18.5 percent as part of a restructuring of $2.8 billion owed by the aluminum giant, the companies said in a joint statement Sunday. The terms of the deal appeared to be extremely generous for RusAl, whose controlling shareholder Oleg Deripaska has been struggling to make payments on billions of dollars of debt incurred while adding holdings to his Basic Element conglomerate .Of RusAl's debt to Onexim, $2 billion will be converted into shares, while the remaining $800 million will be restructured, according to the statement, which was posted on RusAl's web site. "It values RusAl at $40 billion to $45 billion, which is extremely high," said Michael Kavanagh, metals and mining analyst at UralSib. He said RusAl was not worth 20 percent of that implied value. The sides seem to have agreed on using RusAl's value from April 2008, when Prokhorov sold a Norilsk Nickel stake to Deripaska for a combination of cash and 14 percent of RusAl, as well as an option to sell back the RusAl shares at a fixed price. It was not immediately clear, however, why Prokhorov would agree to such terms. Aluminum prices have fallen from about $3,000 per ton at the time of the deal to about $1,400 on the London Metals Exchange. As part of Sunday's deal, Prokhorov agreed not to use his put options on RusAl shares -- which Vedomosti has reported as being worth $7.3 billion -- for as long as a standstill agreement between RusAl and its creditors is active. Prokhorov has previously said he was not planning to use the option. RusAl had been considering using this general scenario to take care of some of its accrued debt. RusAl chairman Viktor Vekselberg said in January that the company might convert some of its debt to Prokhorov into shares, although he did not comment on the possible size of the conversion. The deal, together with the standstill agreement and RusAl's "program for increasing production efficiency," will "let the company successfully overcome the consequences of the world economic downturn," the statement said. Earlier this month, RusAl announced a standstill deal with more than 70 banks to delay repayment of $7.4 billion for two months with a possibility to extend the standstill for another month. President Dmitry Medvedev last week warned unnamed banks not to be too aggressive in trying to recover their debts, comments widely seen as directed at Mikhail Fridman's Alfa Bank, which is also a RusAl creditor. Basic Element units have accused Alfa of being uncooperative in the standstill talks. "Perhaps someone from the government told Prokhorov: 'This is how it's going to be,'" Kavanagh said. "There is obviously something more to the deal, because in the context of the market right now there are a lot more things he could do with the $2 billion than buying a 4.5 percent stake in RusAl." In April, Prokhorov sold his blocking stake of 25 percent in Norilsk, valued at the time at about $8.7 billion, to Deripaska, who took out $4.5 billion from a syndicate of foreign banks to clinch the deal. First Deputy Prime Minister Igor Shuvalov said Friday that the government had no intention of nationalizing RusAl, despite its heavy debts to state lenders. RusAl owes $4.5 billion to state development bank VEB, which in November helped RusAl repay the foreign banks and now holds the Norilsk stake as collateral. The loan is due this fall, and Shuvalov said he was against giving RusAl more time to repay, although he said he hoped that commercial banks or new shareholders would step in. Kavanagh said it was unlikely that private banks would take over the VEB loan, although state-run lenders such as Sberbank or VTB might open a credit line to RusAl. The deal announced Sunday will dilute the stakes of RusAl's shareholders proportionately, the statement said. EN+, the Basic Element unit that controls Deripaska's stake, will hold 53.8 percent, from about 57 percent. SUAL shareholders will own 18 percent, from 18.9, and Glencore's interest will fall to 9.7 percent, from 10.3 percent
Sunday 22 March 2009
Cold Comfort For Ukraine
LONDON, England -- Ukraine's hopes of successfully co-hosting the European Championships in 2012 could be about to hit the buffers after a Sunday Herald investigation revealed that the company responsible for transport infrastructure projects has yet to raise the $7 billion it promised the Ukrainian government.
Sun Land Group, owned by Daniel Mejia, a Miami-based Dominican businessman, last year promised to raise $7bn to invest in 2000km of new roads and bridges needed for 2012. As he signed the contract, Mejia said: "We believe our experience and knowledge of credit resources positions Sun Land to successfully complete these projects on time." Asked last week, 13 months later, if this is still the case, he said it was now "dependent on the Ukrainian government".After the signing ceremony, Mejia issued a press release trumpeting the presence of "Mr Motoo Kusakabe from the European Bank of Reconstruction and Development".This was encouraging. If the contract was backed by such a prestigious institution, surely it was bound to succeed. But last week the EBRD denied "any formal or informal relationship with the Sun Land Group Corporation" and said Kusakabe was not from their bank. He worked for a Japanese bank official and attended in his private capacity. Mejia explained last week that "Mr Kusakabe is our distinguished friend".Has the $7bn been raised? Mejia replied: "The Ukraine government must complete all approvals." Then the money will flow, he insists, through a "private placing structure, directly handled by our company". However, Mejia declined to identify banks likely to provide the money.Mejia's Sun Land business took off in the Dominican Republic with a $76 million deal in 2000 to supply military equipment. His good relationship with president Hipolito Mejia there secured a $115m public works contract the following year.Worries about Sun Land soon surfaced in local newspapers and there was uproar when it was revealed how the money was being raised for its projects. Critics claimed officials were creating financial notes - a kind of IOU - that Daniel Mejia could sell abroad, pocketing commissions, according to the contract, of nearly 14%.This caused upset when the country allegedly broke public spending promises to the IMF. The Miami Herald termed it one of the Dominican president's "major scandals".Sun Land's dealings were soon being described as "controversial" and "questionable" and even "jeopardising the state". It was then uncovered that Sun Land was charging $130m to re-equip the country's police and other services.Two companies Mejia said were supplying equipment couldn't be traced. Critics said cars and motorbikes were overpriced and alleged Daniel Mejia was charging $10,000 for $1000 computers.Jorge Pineda, Editor of Dominican Today said: "We had never heard of the Sun Land company. There was no public tendering and we couldn't understand how they got the contracts. Because of robust reporting by our media and the public outcry that followed, the government had to cancel Sun Land's last contract."Daniel Mejia rejects all criticisms, denies his prices were inflated and insists: "The contract is not dead. That would require an act of Congress."Mark Blinder, confirmed by Daniel Mejia's Miami office as the company's agent in Ukraine, claims that 40% of Sun Land is owned by the State of Florida.But there's no evidence of that in the company's filings. They admit to just four employees and annual sales of only $260,000. Blinder also claims that former Florida Governor Jeb Bush, brother of the American president, will be a "consultant" to the project."I am one of the people who came up with this project," says Blinder. "Sun Land's participation is the result of selection work on the world financial markets."Blinder's relationship with Daniel Mejia was unearthed by Kiev reporter Vlad Lavrov who tracked him to an apartment in one of the city's most prestigious developments. "He was surrounded by fine art and paintings," says Lavrov, "and souvenirs from Odessa, his home town. Blinder was very confident about Daniel Mejia and his Sun Land company. Then I showed him the company's Florida records. He went red and started mumbling. He seemed lost for words."When Lavrov raised the criticisms of Sun Land in the Dominican Republic, Blinder replied: "They hate Sun Land. Daniel Mejia has a good relationship with the president. Those who are against Sun Land oppose the president."Sun Land has been recommended to Ukraine by the US government," Blinder insisted.Lavrov adds: "When I asked him about allegations in Germany and Spain that he was Russian Mafia and involved in money laundering - and more - he stood up and went out to his balcony. It was December and very cold. He smoked a cigarette then came back in and spoke in a self-pitying way."He explained to Lavrov: "I lived in Spain for quite a long time. This story caused me a lot of headaches. It was in the summer when journalists usually have nothing to write about.At that time any Russian who had more than one million dollars on his account, a private house and guards, especially in Basque country where they don't like foreigners, would automatically be considered connected to mafia."Blinder says a new business, Sun Land Ukraine, will be set up "with 100% foreign capital and my direct participation".Companies who want a share of the business will have to play "by local rules".Recently Daniel Mejia has teamed with a two-man business, the Las Vegas based Bioolio Group which promotes a "$10 million Biodiesel Project". When the company registered two years ago annual earnings were estimated at less than $10,000. Nevada officials closed them down because they failed to file adequate information, but now they claim "sustainable and consistent growth" and an "enhanced place in the marketplace".Meanwhile the clock is ticking to Euro 2012. Uefa president Michel Platini is due to visit Ukraine next month for a final decision on whether the country is making sufficient progress and while stadium construction may be running on schedule, the need for roads could yet prove enough to scupper Ukraine's hopes.
Sun Land Group, owned by Daniel Mejia, a Miami-based Dominican businessman, last year promised to raise $7bn to invest in 2000km of new roads and bridges needed for 2012. As he signed the contract, Mejia said: "We believe our experience and knowledge of credit resources positions Sun Land to successfully complete these projects on time." Asked last week, 13 months later, if this is still the case, he said it was now "dependent on the Ukrainian government".After the signing ceremony, Mejia issued a press release trumpeting the presence of "Mr Motoo Kusakabe from the European Bank of Reconstruction and Development".This was encouraging. If the contract was backed by such a prestigious institution, surely it was bound to succeed. But last week the EBRD denied "any formal or informal relationship with the Sun Land Group Corporation" and said Kusakabe was not from their bank. He worked for a Japanese bank official and attended in his private capacity. Mejia explained last week that "Mr Kusakabe is our distinguished friend".Has the $7bn been raised? Mejia replied: "The Ukraine government must complete all approvals." Then the money will flow, he insists, through a "private placing structure, directly handled by our company". However, Mejia declined to identify banks likely to provide the money.Mejia's Sun Land business took off in the Dominican Republic with a $76 million deal in 2000 to supply military equipment. His good relationship with president Hipolito Mejia there secured a $115m public works contract the following year.Worries about Sun Land soon surfaced in local newspapers and there was uproar when it was revealed how the money was being raised for its projects. Critics claimed officials were creating financial notes - a kind of IOU - that Daniel Mejia could sell abroad, pocketing commissions, according to the contract, of nearly 14%.This caused upset when the country allegedly broke public spending promises to the IMF. The Miami Herald termed it one of the Dominican president's "major scandals".Sun Land's dealings were soon being described as "controversial" and "questionable" and even "jeopardising the state". It was then uncovered that Sun Land was charging $130m to re-equip the country's police and other services.Two companies Mejia said were supplying equipment couldn't be traced. Critics said cars and motorbikes were overpriced and alleged Daniel Mejia was charging $10,000 for $1000 computers.Jorge Pineda, Editor of Dominican Today said: "We had never heard of the Sun Land company. There was no public tendering and we couldn't understand how they got the contracts. Because of robust reporting by our media and the public outcry that followed, the government had to cancel Sun Land's last contract."Daniel Mejia rejects all criticisms, denies his prices were inflated and insists: "The contract is not dead. That would require an act of Congress."Mark Blinder, confirmed by Daniel Mejia's Miami office as the company's agent in Ukraine, claims that 40% of Sun Land is owned by the State of Florida.But there's no evidence of that in the company's filings. They admit to just four employees and annual sales of only $260,000. Blinder also claims that former Florida Governor Jeb Bush, brother of the American president, will be a "consultant" to the project."I am one of the people who came up with this project," says Blinder. "Sun Land's participation is the result of selection work on the world financial markets."Blinder's relationship with Daniel Mejia was unearthed by Kiev reporter Vlad Lavrov who tracked him to an apartment in one of the city's most prestigious developments. "He was surrounded by fine art and paintings," says Lavrov, "and souvenirs from Odessa, his home town. Blinder was very confident about Daniel Mejia and his Sun Land company. Then I showed him the company's Florida records. He went red and started mumbling. He seemed lost for words."When Lavrov raised the criticisms of Sun Land in the Dominican Republic, Blinder replied: "They hate Sun Land. Daniel Mejia has a good relationship with the president. Those who are against Sun Land oppose the president."Sun Land has been recommended to Ukraine by the US government," Blinder insisted.Lavrov adds: "When I asked him about allegations in Germany and Spain that he was Russian Mafia and involved in money laundering - and more - he stood up and went out to his balcony. It was December and very cold. He smoked a cigarette then came back in and spoke in a self-pitying way."He explained to Lavrov: "I lived in Spain for quite a long time. This story caused me a lot of headaches. It was in the summer when journalists usually have nothing to write about.At that time any Russian who had more than one million dollars on his account, a private house and guards, especially in Basque country where they don't like foreigners, would automatically be considered connected to mafia."Blinder says a new business, Sun Land Ukraine, will be set up "with 100% foreign capital and my direct participation".Companies who want a share of the business will have to play "by local rules".Recently Daniel Mejia has teamed with a two-man business, the Las Vegas based Bioolio Group which promotes a "$10 million Biodiesel Project". When the company registered two years ago annual earnings were estimated at less than $10,000. Nevada officials closed them down because they failed to file adequate information, but now they claim "sustainable and consistent growth" and an "enhanced place in the marketplace".Meanwhile the clock is ticking to Euro 2012. Uefa president Michel Platini is due to visit Ukraine next month for a final decision on whether the country is making sufficient progress and while stadium construction may be running on schedule, the need for roads could yet prove enough to scupper Ukraine's hopes.
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